Describe about the Strategic Information System for Business Advantage Model.
A strategic information system model that could be useful for any organization is Porter’s competitive advantage model. It is important for any organization endeavoring to employ a strategic information system as a development strategy to ensure that it understands the different models in existence. Having this knowledge will be instrumental when it comes to making a choice of a model (Edney and Symons, 2014). Michael Porter is the developer of this model where he seeks to answer two questions. Firstly, what is the level of structure attractiveness of the organization and secondly, what market share does an organization control? To answer this question, it is best to undertake analysis where the best analytical tool is Michael Porter’s industry analysis which endeavors to discover where the power of the industry lies. The purpose of seeking to understand where this power lies is to open up the possibilities for the roles that the information systems will play in the model.
There are five basic functions of the industrial analysis of the competitive advantage of an organization. The threat of new entrants involves the assessment of the amount of difficulty that new entrants will face when trying to join the industry. The threat of substitute services or products regards the ease with which the consumers can substitute an organization’s products or services for cheaper alternatives. The bargaining power of suppliers is also one of these functions which endeavor to analyze the power of the supplying companies within the industry to increase their product prices thereby increasing the final price of the product. The bargaining power of buyers entails the ability of the clientele of an organization to drive down the product and service price of the organization (Firn, Preston and Walshe, 2016). The final function is the intensity of rivalry among the competitors.
The basic idea here is that the competitive advantage of an organization develops out of the ability of the firm to conduct its operations either in a unique way or in a way that is less expensive than its competitors. A strategic information system seeks to ensure that there are effective communication channels in an organization (Gaden et al., 2008). Thus, if it is of Porter’s model, the strategic information system will seek to achieve this in a way that is either unique or in a way that is less expensive. The ultimate goal that a strategic information system seeks to fulfill is to increase and maintain the profit margin of an organization. If a strategic information system can become unique and more efficient in that it has lower operation costs, then it gives the organization a competitive advantage over its competitors thereby reinforcing its position in the industry.
The essence of a feasibility assessment is to understand if a certain tool or equipment can be effective in a specified operating environment. In this case, Michael Porter’s competitive advantage Strategic information system model is the subject of analysis. The subject under scrutiny is whether this model can be effective in ensuring that an information system can meet its strategic objectives (Garcia and Santos, 2009). Primarily, Porter’s model provides a thorough analysis of a company’s business environment in a bid to understand where the competitive advantage of the organization lies. By so doing, it provides a keener understanding of the business environment. The result of this is that the information system will collect data from every inch of the business environment ensuring that the system deals with updated information. That will ensure that the organization’s management makes informed decisions instead of making decisions on assumptions.
Another basis of the feasibility assessment is the fact that this model can be integrated with technology. Technology has become part of the business world in the twenty-first century. Numerous advantages come with utilizing technology as part of the information system. Using technological elements in the strategic IS means that there will be a fast transfer of information from the point of origin to the destination points (Hallinger and Bryant, 2013). For instance, using the internet as a communication channel enables one to reach more than one person at a time. That increases the speed with which information is shared in an organization. Communication technology will also ensure the security of information shared through it. A good example can be the use of firewall software to protect information shared through a network.
A strategic information system should be one that meets the technical requirements of the organization. For instance, before an organization implements an information system, it will have to take into account technical issues such as change acceptance in the organization. The organization needs to find out if its staff is having an easier time with the new system or not. Change acceptance determines how development is received in an organization (Rainsford et al., 2016). Where change is not accepted, it could cost an organization more to try to increase the acceptance levels by implementing change management techniques. An organization should have change management policies which will manage the installation of the new system in ways that the members of the organization find comfortable. That will ensure that the new system does not bring more harm than good to the organization.
The legal feasibility of a strategic information system is an important consideration when it comes to choosing a model. Legal conformity is a must because failure to adhere to the laws and regulations of a country may bring dire consequences upon an organization. A strategic IS needs to ensure that it follows the requirements of the law. For instance, a strategic IS will have to ensure information security in a bid to meet the confidentiality agreements that a company enters with its clients (Legg et al., 2016). If these standards are not met, the organization stands to face legal charges. For instance, if an organization does not secure its information channels, it is risking exposure of confidential and sensitive information of their clients which means that they are liable for legal consequences. Therefore, there is a need for a constant review of the laws to ensure that the information system meets the legal requirements.
Compliance is a strategy for the strategic information systems. It is important for effective information systems to have in place a governance, compliance and a risk management strategy whose goal is to keep pace with new legislations that come up regarding management of information systems (Sallnow et al., 2016). The essence of this strategy is to shield the organization’s information system from the effects of changing law. An effective strategic information system also uses the legal environment as a source of information. The legal environment affects the operations of an organization which means that having an information system that provides the organization with updated information regarding the legal environment of the organization can be instrumental towards ensuring organizational compliance. The information that the information system provides regarding the legal environment can be used as an input in the decision-making process.
The primary role of the strategic information system in any organization is to ensure effective and efficient communication within an organization. The significance of communication to an organization cannot be understated. Effective communication in an organization is that which is two-way, that is from the management to the employees and employee feedback (Brown and Dyson, 2007). When information flow is only downwards from the managers to the employees, then the managers will not be able to make sound decisions regarding the employees. It is through employee feedback that the managers can know the issues affecting the workforce. That ensures that the managers can solve these issues and improve the working environment for the workers. Employee feedback also acts as motivation in an organization since it makes the employees feel that their welfare is being watched thus increasing their loyalty to the organization.
The strategic information system also considers the clients of the organization as inputs to the system. The information system endeavors to create a direct link between the clients and their organization. A culture where the clients of an organization maintain a one-on-one linkage with its clients will increase customer feedback (Waring and Skoumpopoulou, 2012). The essence of customer feedback is that it provides the organization with information regarding customer expectations. That is an important input to the quality management processes of an organization which ensures that the services and products of a company are tailored to meet customer expectations. Therefore, a strategic information system increases the loyalty of the customers to an organization by ensuring that the company manufactures goods and provide services that ate in line with the expectations of the clients. That ultimately results in increased profit margins.
This is an analytical tool that seeks to identify the strengths, weaknesses, opportunities and strengths of an entity (Biondo et al., 2016). A strength of having an effective strategic information system is that the decision-making processes are sound since the processes receive up to date information. Sound decision-making processes will ensure that the operations of the company run smoothly. A weakness that may result from having a strategic information system is that it is difficult and expensive to have an entire system overhaul just to introduce the new information system. By so doing, the operations of the company will slow down reducing the profit margins. An opportunity that presents itself from the use of a strategic information system is the fact that the system provides information that can be studied, and manipulated to form trends which can be used to forecast the future (Tsourtis et al., 2015). Thus, it will ensure that the organization can plan for the future and meet it with certainty. The threat that presents itself from adopting a strategic information system is the resistance to change which can be found in any organization. When an organization decides to change its information system, it has to prepare for this resistance by ensuring that there are change management mechanisms in place.
Before the implementation of a strategic information system, there is a need for information system planning. It is the process through which the information requirements are identified and analyzed while at the same time they are being integrated with the overall objectives of the organization in question (Taylor et al., 2008). The reason why an organization ought to conduct information system planning is to ensure that it keeps up with the changes in information and communication technology. There are three levels that the organization will plan on regarding the information system planning, namely: the strategic planning, management control, and operational control (Best et al., 2016). The strategic planning entails the setting of strategic objectives that the strategic information system should achieve. Moreover, it entails the formulation of the strategies that will be used on the system in a bid to increase its effectiveness. The management control level endeavors to plan for the overall management of the information system. That includes the management policies that will be in place to ensure that the information system is more effective. The operational control planning plans for how the system will run. For instance, will the system utilize information technology?
Theory
There are three theories in existence which endeavor to explain the use of strategic information systems. The first theory is Porter’s competitive advantage theory which presents a framework that organizations can use in the creation and sustenance of a competitive advantage over their competitors. The theory prioritizes the establishment of the source of the power of the organization which is done through Michael Porter Industry analysis process (Baker, 2008). As discussed earlier, the industry analysis is dome by measuring the above-mentioned criteria which will tell whether the company’s source of power is in fewer numbers of competitors or a low threat of substitution. The second theory is the differentiation advantage which is Porter’s second type of competitive advantage. As discussed earlier, a company can develop a competitive advantage by conducting its operations in a manner that is cheaper than their competitors or by doing them uniquely. The differentiation advantage dwells on developing one or more characteristic of a product or service which is valued most by the clients (Swanberg et al., 2016). Thus, by focusing on these characteristics, the product or service becomes more attractive to the customers increasing customer loyalty. That gives the company a competitive advantage. The third theory is the Wiseman’s strategic perspective where Wiseman posits that companies are using information systems strategically in a bid to earn a significant competitive advantage (Waring and Skoumpopoulou, 2013). However, according to this theorist, the use of information systems may not always provide a competitive advantage. However, it can be instrumental towards the achievement of an organization’s strategic plan.
The primary activities of a strategic information system include the inbound logistics which involve the receipt as well as the storage of the raw material. That is inclusive of the general management of a company’s supplies. The second primary activities of the information system are the provision of knowledge on the operations of the company which focuses on the manufacturing or service steps. Outbound logistics is the third activity which entails the collecting, storing as well as the physical distribution of the products to the consumers. There are also sales and marketing activities which deal with the price management, order entry, and customer relations. Finally, the after-sale service activities are primary activities that cover the provision of support for the product in the field, customer training, and product installation. The support activities, in this case, are not directed towards the clients. Instead, they allow the organization to perform their primary activities. The first activity is procurement which involves the purchasing of the raw materials that an organization uses in the production process. Technology development is another support activity where an organization can employ technological devices in the strategic information system to increase its efficiency and efficacy. Human resource management activities involve recruiting, training and developing the right people for the right job (Arnesen et al., 2007). That ensures that the systems and processes running the information system are effective and smoothly running.
An information technology company that can provide an example of a strategic information system is Florida Power and Light company which has in place a computerized total quality management system. The system is a part of the information system which provides communication between an organization and its clientele. The system is dependent on the feedback from the clients. The advantage of having this system is that it allows the organization to meet the expectations of the customers which is instrumental in developing and maintaining customer loyalty (Arias-Arianda, 2007). Thus, for this company, having a computerized TQM is strategic as it fastens the communication between the organization and the clients. Thus, with a strong customer base, the organization can retain its strategic position in the market.
Cost benefit analysis
The advantages of having a strategic information system far outweigh the disadvantages. For instance, the strategic IS ensures the flow of communication throughout the organization to the extent that every member of the organization is well aware of what is required of him or her. That ensures that the work flow in the organization is smooth (Agasisti et al., 2008). The system also results in the maintenance of customer loyalty. A disadvantage that can be seen with the strategic IS is that using a complicated system might be costly and harder to adapt to in the organization. Following the numerous advantage, this system promises maximum profit for the organization.
Conclusion
The strategic information system is a viable strategy for an organization to increase its profit margins and reestablish a higher position in the market. It promotes the flow of information throughout the organization which assists in the efficient utilization of resources. It also promotes employee loyalty to the organization since in the strategic IS, information flows in two ways, from management to the employees and back upwards. That ensures that there is a good relationship between the employees and their managers. A good relationship reduces conflict and assists in focusing the efforts of the organization towards accomplishing organizational goals. The Strategic IS also ensures that the organization establishes a good rapport with the customers since the organization can meet the expectations of the clients.
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