Manager

Strategic Information System The strategic information system is a backbone for any organization as it gives the organization a platform to address and streamline its business process and instead of reactive approach it gives the foundation for proactive thinking and as a result give the organization ideas how they can improve the processes continuously to get a competitive advantage over other organizations in the same business. The only way the companies can get a competitive advantage is if they are closely monitoring the changing environment around them and adapt to them quickly to get advantage of these changes and these changes could be anything from technology to cultural changes and changes in liking and disliking of people over time. Therefore Strategic information system is like a network management protocol which constantly monitors system and alert you about your deficiencies and give you a direction how you can improve or replace them with practises in best interest of the company Key characteristics of Strategic Information systems are as under (Bhatia 2007): 1. Decision support system which helps organization to streamline their process and integrate information system with business strategies 2. Resource management system which optimises the use of resources e:g in terms of human resources, how to better utilization of their skills and one of the strategy could be to put them into different specialist pools and assign them responsibilities in the area of their expertise 3. Centralized database system to efficiently handle customer requirements and to make effective and efficient use of corporate resources for marketing and innovation 4. Real-time information system which normally gets instant feedback about organization performance and an indicator of how good the organization is performing There is a general agreement that strategic systems are those information systems that may be used gaining competitive advantage (Leopoldo 1999). Different people have different opinion on how you can get competitive advantage and in reality there is no hard and fast rule gaining a competitive advantage. It is more of thinking wisely and come up with a business plan that support your company vision along with right technology tools to support the decision. There could be many factors that can count towards the real competitive advantage e:g cost, unique product or service, targeting the right market segment and last but not the least innovation. There could be many others but at least these are the fundamental ones. Technology gives the tool to implement and support the components discussed above. In an essence the process of aligning the computer strategy with business strategy is what we call strategic information system (Leopoldo 1999). Business strategy and information system strategy needs to be tightly integrated with each other to work. If we look at the case studies of Country Holidays and AAA fashion retailer both organization had well defined business strategy and well aligned with information system strategy. Both organization had a clear vision of where they want to see their company and then carefully selected the right technology tools to get the desired results. What makes an organization modern is their willingness to adapt to the new technology which can be beneficial for their organizational goals. This means that Strategic information system can be purposely designed for any organization provided the organization is willing to adapt to new technology to enhance the performance of the company. Aligning Business Strategy with Information System Strategy In the case study we have learnt that Country Holidays purposely built their information system strategy to target defined set of potential customers e:g Country Holidays strategy was to handle calls as quickly as possible but still giving their customer all the information they are looking for. By implementing the Automatic call distribution system (ACD) along with centralized information database they achieved the great results. If we look at the case closely we find that business strategy was to handle more calls with minimum possible time but with no compromise to quality of service and information system strategy was to put the property database and ACD system together to get the desired results. In the end economic benefit was clearly visible. Same is the case with AAA fashion retailer, to stream line the mainly their buying process they built a strategy to achieve the goal and their strategy was to position the buying centrally therefore they placed a central database model and linked all of their stores with the main office. They selected all the software modules carefully to cater all the functions needed by their different departments. In the end they had robust system which had a great control and efficiency for their buying process and it also help them to reduce the cost. What is a Business Model The way to convert innovation to economic benefit is called Business model (Kotelnikov 2009). Business model defines how company can make money by identifying its position in market. It also specifies the role of each department within a company e:g marketing, ICT, Finance etc. In simplistic term Business model specifies the direction of the company and defines how company is going to generate money to survive Important Components of Business Model Majorly there are three components of business model, Strategy, Capability and Value. All three components need to be clearly understood and appropriately implemented to get the maximum benefit out of business model. Strategy is the backbone of any business model which defines the organization standing in market among its competitors. Once the strategy is defined then capability needs to be analysed to see if company has ample resources in terms of hardware and human to best integrate with the strategy. On the basis of above two components discussed the value is calculated to see what is the economic benefit company is going to get. Strategic Information System and Business Model By definition Strategic information System is a information system which provide the support to change the strategy of the enterprise. In the recent years Information Systems has evolved to Strategic information systems and role of information technology in the organization has changed significantly. In 1960s information technology was seen as data processing entity (Pant and Hsu 1995) and computer were used as standalone and cost reduction function. In 70s it was changed to interconnected business support and then in 90s from Management information system to strategic information systems which became the backbone for any decision making of business and focus became on network integrated systems. Business Strategy and Strategic Information Systems: The use of information technology has changed the way we run businesses these days (Bhatnagar 2007) and where significant advancement in technology has brought a lot challenges for the management it has also brought a lot of opportunities to them. It is important to have firm and well defined strategy to get better results out of information systems. It is also very important to have well aligned coordination between business and technology strategies The use of strategic information system to get long term goals needs to defined and understood clearly. It is important to have complete understanding of business strategy so that information strategy can be defined and for any business model to be successful business strategy needs to answer three core questions: 1. What type of strategy is required' 2. Do we have a capability to execute it' 3. What is the economic benefit we are going to get for stake holders The successful strategic information system can be defined for any type of organization as long as they can answer above three questions. When it comes to Strategy it is not like one fit for all approach therefore every organization needs to evaluate its own circumstance, opportunities and challenges to define their strategy. Once strategy is defined then they need to ask the question if we have capability to execute it. Capability from human resource, skill set to hardware and software capacity. Lastly but very importantly economic benefit needs to be evaluated as this component is the driver for this whole exercise. IT is the backbone for strategic management and some of the key drivers for any modern organization to adapt to Strategic information system are as follow: (Hemmatfar 2010): 1. Cost: Cost has always been a matter of concern for the enterprises and enterprises always try to cut their cost to maximize the profit for their stake holders and to grow their business. By the use of information technology the cost can be reduced significantly. For example, a Booz- Allen & Hamilton study found that: a traditional bank transaction costs $1.07, whereas the same transaction over the Web costs about 1 cent; a traditional airline ticket costs $8 to process, an e-ticket costs $1 (ibm.com/ partnerworld/pwhome.nsf/vAssetsLookup/ad2.pdf/$file/ad2.pdf) 2. Productivity: Enterprises can increase productivity by applying the fundamentals of Strategic information systems. Productivity of any organization can be increased by simply changing the process e:g giving employee access to their computers remotely can save travelling time 3. Innovation: Keep adding new feature to offer customer special and unique products. This will stick the customer with the company 4. Time: Timing is everything. If product is not delivered at right time in the market then it would be advantage for the competitor to capture that opportunity When we study the affects of information technology on two organizations (case studies attached) we learnt that both organization were very keen in getting the best available technology and integrate it with their business model to get the desired results. Both cases are very different from each other as one is fashion giant and other is very small service provider for tourism industry but both companies have one thing in common which is their willingness to use the technology to fulfil their business goals and vision for the future. The core purpose of implementing the technology in both organizations was not to achieve the technology excellence but to get business goals and technology just supported the business to get them. In relation to three core components of business model strategy, capability and value if we compare both case study organizations we find that both of the organizations analysed and worked through what technology solution was needed for their company and analysed their own capability to get the best value for their money spent on the solution. Green Philips’s success was majorly came from his understanding for the company’s vision and his understanding how technology can help him to deliver the desired results. The use of technology enabled them to track the trends and analyse the historical data for future decision making. The importance of customer data is mentioned by David Jones (IT manager – Country Holidays): ‘I’m absolutely confident that we can reconcile whatever figures we produce, Whereas in the old computer system that we replaced we just couldn’t. If a figure was produced on a bit of paper we had to believe it as well, because I had no one still in the company who knew how those programs worked and whether indeed they were actually producing the information they purported to’ (Interview with David Jones) By reading the case it is clear that what make the organization modern is the use of technology and to translate it to strategic advantage, technology needs to be well aligned with companies business model to get the desired results in shape of company growth and economic value. Now if we look at the AAA giant European fashion retailer it is quite different from Country Holidays as this retail giant had more than 65000 employee and really want to control their processes but their vision of using the technology was pretty much similar to Country Holidays mean get the operational excellence and increase economic value. If we look at the solution AAA implemented was very custom built to cater the needs of the organization, very well focussed to stream line the process of buying and additionally gathering data for research and future decision making. Therefore not one solution would fit for every organization but most importantly company’s business vision plays an important role in selecting the best strategy to design the technology solution. Technology itself cannot make the organization reach to their goals instead it is the strategic thinking which gives the platform for the company to enter into the technology world to get the advantage. Strategic Information System and Competitive Advantage Strategic information system gives organization a competitive advantage in many areas e:g cost, efficiency, better utilization of resources etc. When we ready the case of “AAA” a fashion retail store chain in Europe it gives us insight information of what role an information technology can play to improve the process of retail fashion chain. AAA is one of the largest chains of department store in Europe, with 6500 employees and over 100 outlets of different sizes and mainly located in downtown (Jelassib, Kronena, Loebbecke 2000). AAA was traditionally supporting a decentralized system for all its business process and decisions for buying all fashion merchandise were made by the every retail fashion store independently thus presenting the main office with few challenges such as which office has ordered what type of merchandise and what are the delivery dates, order duplications, over stock etc. On top of that the biggest challenge was to reduce cost and streamline the buying process to get a competitive advantage To address these problems and more AAA implemented New Merchandising System in 1991 called FIPS (Fashion Information and Planning System) which consists of four modules and integrated “fashion information and planning system”. FIPS along with four modules covers the whole merchandising process from receipt of goods to delivery. The idea was to centralize the decision making of buying the goods on basis of information gathered from FIPS. FIPS played very important role in centralizing the information statistics and not only stream lining the process of placing the orders but also to reduce cost by avoiding the order duplication by different stores and avoiding the excessive storage cost. FIPS connected all the stores with central main office and thus AAA changed its business strategy from decentralized system to centralized system. The some of the improvement AAA experienced with the implementation of FIPS are easy aggregation of order positions per article, automatic gathering of core data, automated inventory control system, management reports for decision making, ease of handling multiple large number of orders, Keeps tracks of logistic data etc. After the implementation of FIPS AAA divided the stores in each region and each region is headed by a regional buyer centrally. The regional buyer had the access to all data from its assigned store and thus they can run queries to identify the merchandise requirement for each of its store so orders can be placed in bulks with better price negotiations. In short AAA was able to control all its process in a best possible way and had more visibility as what is needed in each of its store in timely fashion which has give them a competitive advantage in terms of better cost, timely delivery and better access to their customers. On the other hand if we look at the case study of Country Holidays which started as very small home based business we have learnt that Information system plays an equally a major role in enhancing the competitive advantage for smaller businesses too. Study has concluded that it does not matter how big or small organization is but the most important thing is how they implement strategic information system to get the maximum benefit out it. As Beioley (1990) explained, ‘self-catering letting agencies have expanded dramatically over the past 20 years’. When country holiday was founded there were only few such agencies and the one’s there were slow growing organizations without any use of information technology. The Country holiday was founded in 1978 by Philip Green. By 1987 company expanded significantly and 1989 Green sold the company to Aldcroft and Roger Pickering, the operations director. Aldcroft and Rogers’s vision in use of technology lifted the revenues for the company to £50 millions which was four times that of their competitor, English Country Cottages. When we read this case we have found that Country Holidays really took the advantage of using the technology available that time and continuously enhanced their capability to service the customers in best possible way. The company initially started with storing the data on the cards and then eventually realised they need something more sophisticated and robust if they want to grow their customer base and want to service them in efficient way. Then company invested in t Altos micro at the time when non of their competitors were investing in the technology and were running the business by their tradition means. Another aspect of the this case is that its not only the technology which had give the company the advantage over their competitors but the early adoption of right technology which benefited the company most. Further company did not stop it there; the company was using ‘key and lamp’ telephony system which they replaced with automatic call distribution system. By 1990 company implemented a SQL based database system which could hold all the property information and can process the booking request more efficiently and quickly then ever. The implementation of the new system made it possible for the company to handle more than 2000 bookings a day which was not possible to achieve without the use of technology. After detailed analysis of this case study it has been concluded that Strategic information system has given AAA a competitive advantage in the following ways: Cost reduction AAA was able to reduce the cost associated with the process of placing the orders and it also avoided the duplicate orders and enhanced the bargain powers with the suppliers/manufacturers. As discussed above it was only possible with the use of FIPS system and without the use of such a system AAA could not achieve such results Supply chain efficiency With the use of FIPS AAA was able to tack all the complete order with the manufacturer in real time and also incomplete orders could be tracked and acted upon accordingly and timely which is given them advantage of tracking the issues with the orders at first place and fix them so that no problem arises in the delivery and goods are delivered in time. Accurate Demand Predictions With the help of FIPS AAA was able to get the data from all the stores and could predict what is needed in each store which mean the inventory on each store can be filled before it reaches to certain low level so this gave them a continuous supply without any disruption and without any manual human interaction and that saved them some money that was previous spent on manual process. Now AAA was able to get multiple big orders without any interruption. Centralize data processing Most importantly now all the important data including but not limited to all fashion trends, prices in all the stores, inventory statistics are available centrally for the main office. A user can run queries on the central database and can extract the required reports in minutes without any manual works which could take many days or even months before the implementation of FIPS After reading the case study few question comes to the mind e:g how much benefit Country Holidays got by using Information technology did they really got advantage and if that advantage sustainable' Therefore some of Advantages that Strategic information system has brought for the Country Holidays are outlined below: TOP System: In 1985 the videotex-based TOP System handled 3,219 passenger bookings in first four hours of the holiday bargain while the other operator did not perform so well. This mean using such a system had given them competitive advantage which their competitors were lacking. Handling the business volume more effectively and efficiently was the major benefit given by use of information technology Market Growth The use of technology has significantly expanded the customer market for Country holidays. In old times a book with addresses of the properties was maintained but with the adoption of new technology company expanded its customer base as the technology made it easy for the company to reach to more customer in less time and providing them best available service. Skilled Work Force Work force was trained how to effectively use the information technology so that they can service the customer in best possible professional way. Work force was so trained and properly equipped with technology tools that they were able to handle four times more work then their competitors which was indeed a very big advantage for the Country Holidays. That not only helped the company to grow the business but also improved the professionalism for their employees It’s a big debate weather a technology advantage for an organization is sustainable or not specially in an environment where technology hardware prices are coming down every day and new technology is more and more accessible to everyone then it was in the past, it is difficult to say that any organization can sustain its strategic information system advantage over its competitors but this is very clear that organization are required to continuously monitor and improve the process to always search for the opportunities which can give them advantage which their competitors don’t have. Few IT Management Suggestions for the Firms: Centralized System: we have discussed many benefits of centralized system quite extensively above but where centralized systems have many benefits there it comes with few risks and therefore risk factors needs to analysed carefully. Question like what’s going to happen if some disaster happens to the central facility needs to be answered References: Strategic Information System  Akshaya Bhatia 2007 http://it.toolbox.com/wiki/index.php/Strategic_Information_System Business Model The Way of Winning the Competition Battle and Creating Economic Value for Your Stakeholders Vadim Kotelnikov 2009 http://www.1000ventures.com/business_guide/business_model.html Strategic Information Systems Planning: Somendra Pant and Cheng Hsu 1995 http://viu.eng.rpi.edu/publications/strpaper.pdf Strategic Information Systems Planning Ankit Bhatnagar 2007 http://www.coda.ac.nz/cgi/viewcontent.cgi'article=1000&context=unitec_scit_di Competitive Advantages and Strategic Information Systems Mahmood Hemmatfar, Vol 5, July 2010 http://www.ccsenet.org/journal/index.php/ijbm/article/viewFile/6631/5247 Characterization of strategic information systems Leopoldo http://www.monografias.com/trabajos7/chaof/chaof.shtml Case Study - The role of information technology in retailing: the case of supporting fashion purchasing at a European department store chain Claudia Loebbecke”, Juliane H. Kronena, Tawfik Jelassib 2000 http://www.sciencedirect.com.simsrad.net.ocs.mq.edu.au/science'_ob=MImg&_imagekey=B6VG3-465RV88-V-1&_cdi=6027&_user=21981&_pii=S0963868796800230&_origin=search&_zone=rslt_list_item&_coverDate=03/31/1996&_sk=999949998&wchp=dGLzVtz-zSkzV&md5=ea7baf79c0fd7480d7f9fcf5c2aea3a9&ie=/sdarticle.pdf