Using Information Technology Competitively
As we have with other topics during the course, we return to the concepts of competitive advantage and the impact on the value chain using e-Commerce/e-Business to increase the potential for increased returning customers and increased satisfaction, both of which lead to success. This section discusses how business organizations leverage Information Technology throughout the value chain. E-Business and e-Commerce, by their nature, involve technology. As we have done previously, Take some time to think specifically about which elements of the value chain are affected by e-commerce or e-business capabilities. A business organization may use e-commerce for marketing and sales, or it may use e-commerce to order raw materials from other businesses or provide customer service support. That same business will use e-business to make it easier for customers to order and receive merchandise or services. Write down two or three uses for e-commerce for each element of the value chain affects by e-commerce or e-business.
Identify your information systems needs
It is almost always the case that there are insufficient resources for an organization to take advantage of all of its opportunities to use IS to obtain business benefits. Such resources can be in the form of personnel in an internal IS Department or cash to hire outside consultants or both. Because of this, it is important that organizations be sure they are using their scares resources on IS projects that have the greatest value to the organization. A time-tested way of doing this is to have a process for setting IS development priorities that are consistent with and aligned with organizational priorities. In the literature, this is typically called "Strategic alignment". There are three general approaches that organizations take to setting priorities for Information Systems projects. (Some practitioners say "there is no such thing as an IS project; there are only business projects. Such a perspective emphasizes the importance of obtaining business benefits from an investment in IS). The three general approaches to setting priorities (also known as developing a strategic plan for the IS function) are:
- Have the IS Department set Priorities
- Have a Cross-functional Steering Committee set Priorities
- Conduct a Systems Planning Project
Each of these approaches is discussed in more detail in the following paragraphs.
Have the IS department set priorities
The person in charge of the IS functions, particularly in larger organizations is called the Chief Information Officer or CIO. The CIO is responsible for new system development, systems operations, and maintenance of existing systems. Ideally, the CIO has a solid understanding of the organization's overall strategy and tactics as well as a good understanding of IS issues. A competent CIO should be able, therefore, to do a good job of setting priorities for the IS function. All too often, however, the CIO is more comfortable with technical issues and undertakes projects that are interesting from a technical standpoint, but offer little in the way of business benefits. On the other hand, some CIOs have an insufficient command of technical issues and therefore overlook opportunities to use IS to make their organization more efficient, effective, and innovative. Finding a person with the right blend of business and technical savvy has proven to be difficult, and, thus, CIO has come to be known, in some circles as "Career is Over".
Have a cross-functional steering committee set priorities
Many organizations use a cross-functional steering committee discuss and agree on overall priorities for the IS function. All major areas of the company are represented, including, for example, accounting, finance, human resources, operations, and sales and marketing. Having all areas involved provides some assurance that the organizations needs and opportunities are addressed in the proper priority sequence. The shortcomings of this approach, in practice, however is that some heads of areas may not be as supportive of IS as they should be, and the process can become complicated when organizational politics intervene.
For example, the organization's best opportunity for obtaining business benefits could lie with a new information system to track how well sales are performing in order to be sure that customer demands will be met, but this opportunity is not understood or appreciated by the sales manager. Without the support from the sales manager and IS project in his or her area would be unlikely to succeed, so the organization's best opportunity is lost. On the other hand, it could be the case that the operations manager is has a strong and persuasive personality, and by force of argument in steering committee meetings is able to convince other s that operations projects should get the highest priority.
Develop a formal plan for information systems
Even small companies will get benefit from taking a relatively short to develop a formal plan for the information systems function. In Chapter 1, and elsewhere in this book, we have emphasized the value of having a formal business plan to guide the organization. Many organizations take their business plan down another level and have formal plans for individual departments, such as sales and marketing, operations, and human resources. It is particularly important to have a written plan for the Information Systems function as top management must be assured that the benefits of IS are being applied in accordance with the overall goals of the organization. IS professionals call the end result of an IS planning process "strategic alignment", which simply means that the strategic goals of the IS function are aligned with the strategic goals of the organization.
In a very small organization an information systems plan can be developed by one or two individuals. In larger organizations, it is usually developed by a project team, sometimes with the assistance of outside consultants. The important thing is that resources devoted to developing an information systems plan have knowledge of current and emerging information and communications technologies as well as a solid understanding of the organization's strategic plan. Development of a formal plan usually involves interviewing managers in each organizational unit to obtain their perspectives on issues such as:
- The overall strategic plan or direction of the organization.
- Plans of individual organizational units developed in support of the organization's plan.
- Industry trends, competitors' strategies and common practices.
- Legal and regulatory record-keeping and reporting requirements.
- Current problems and opportunities with operational processes.
- Information needs for planning and decision-making.
Identifying business entities (e.g. customers, products, employees, etc) and data (i.e. attributes) required to describe each entity.
Once this is done, possible IS projects can be determined by identifying natural groupings of process and data and/or unmet information needs of managers. Possible projects must then be ranked in priority sequence.
Technical issues must be considered next, because the several applications that the organization eventually uses often share a common technical platform (e.g. PCs, networked PCs, etc). As we discussed earlier in this chapter, another option is to adopt the "software as a service" (SaaS) approach when it is available and appropriate. Technical issues may cause a reassessment of the priority sequence of possible projects. For example, it may be easier or more logical to install the organization's first application which uses database management software on a smaller project to let personnel get familiar with the software before moving on to a larger, more risky project. More details on current technical concept and issues are available in Global Text's Information Systems Text, Chapter 7. You may also like to scan the table of contents of the IS Text for additional readings as it covers many of the topics we discuss here in much greater detail.
Once a plan is agreed, it is implemented. Most organizations find it useful to update the plan at least yearly as business and technical issues can change quickly.