Unit – 3 –

The Strategic Role of Information System

• Key Application system in an Organization

• Information System and Business Strategy
• Use of Information System for Strategic
Advantages
 For Companies Both Big and Small:
Running a Business on Smartphones – Case Study
• CASE IN POINT: - In early 2006, San Antonio, Texas-based CPS Energy, the nation’s largest municipally
owned energy provider, was by all accounts riding the road to riches.
• PROBLEM : CPS Energy’s VP and CIO, it couldn’t have been more clear that a hange was imminent—
and that the future of the company might depend on it. They were often required to visit work sites or
customer locations to diagnose issues or suggest fixes before reporting to the appropriate departments
or parties, which would then initiate the next step of the resolution process. “If we kept with the amount
of manual labor that it took for us to accomplish that work, we would not be in the position to be
competitive in the future,” Barron says. From this realization, the company’s Magellan Program was
born.
• SOLUTION: CPS Energy’s VP and CIO, it couldn’t have been more clear that a change was imminent—
and that the future of the company might depend on it. They were often required to visit work sites or
customer locations to diagnose issues or suggest fixes before reporting to the appropriate departments
or parties, which would then initiate the next step of the resolution process. “If we kept with the am
ount of manual labor that it took for us to accomplish that work, we would not be in the position to be
competitive in the future,” Barron says. From this realization, the company’s Magellan Program was
born.
• CHALLENGE : One of our biggest headaches has been, and continues to be, the perception that the
technology brings little to the table other than e-mail, and it costs a lot
• STRATEGY: we’ve gone to specific groups, engineers, line workers, office workers, and because it’s so
cheap we’ve been able to give the devices out on ‘experimental basis.’ There’s so much value in these
handheld sevices and two or three applications that they prove themselves,” he says. “You just have to
get them into the hands of the people that actually need to use them in order to demonstrate that.”
 Case Study (…contd)
• BENEFITS- -
• 1) Three innovative ways CPS staffers use their smartphones are as digital cameras at work sites, as GPS
tracking mechanisms, and as emergency notification receivers. In the past, CPS might have had to
dispatch a small group of “generalist” workers to a service call to make sure the correct person was
there. Today, a single worker can visit a site, take a photo of a damaged piece of equipment or
infrastructure, and then send it back to headquarters or the office. Then an expert diagnoses the issue
and sends along instructions to fix the problem or dispatches the appropriate worker, who is available
immediately via voice e-mail and SMS text via smartphone.
• 2) The use of smartphones and other technology, has or will empower all employees, no matter what
work they perform, to become part of the greater company’s ‘thought network
• 3) The company is also seeing significant gains in supply chain efficiency related to Magellan and the
smartphone deployment, he says. For instance, smartphones help speed up the purchase order process,
because in the past a specific person or group of people needed to be on-site to approve orders. Now
the approvers can be practically anywhere with cellular coverage. the time it took to close purchasing
and procurement deals decreased by more than 65 percent.
• Also, inventory levels were reduced by more than $8 million since the Magellan Program began. In
addition, both employee and customer satisfaction levels are up, Barron notes, because staffers now
have more access to corporate systems and information, and they feel closer to the business. Because
CPS can now resolve more customer issues with fewer processes, they’ve reduced the time it takes to
complete most service calls, leading to happier Customers In fact, the company received the highest
score in J.D. Power and Associates’ 2007 Gas Utility Residential
• Customer Satisfaction Survey.
 Thought Through
• Evaluate CPS energy’s competitive edge as a result of
smartphone deployment in the light of Porter’s five
forces
• Do you think this solution will continue to prove a
competitive edge for CPS energy in 5 years time?
What should be a constant focus to build a
competitive edge in the market
• Another way of identifying MIS value is through
Porter’s value chain. Identify in the light of the
current MIS deployment, the specific functions /
processes in the value chain that were impacted
• How has the current MIS deployment impacted HRM
practies?
 Thought Through
• What sort of advantage/disadvantage does the current deployment
of IS provide in terms of switching cost to the customer
• Explain business process reengineering (BPR) initiated by this IS
initiative. Explore the challenges of if BPR without the use of IS
deployment
• Do you think the current IS deployment provides an edge in
developing an Agile Company
• How can this company leverage the current IS deployment In
initiating a virtual company, however small it may be?
• How important is knowledge / intellectual property for this
company. Use A Pyramid to define various knowledge system layers
for this company
IT’s competitive advantage
Porter’s five forces – How IS drives
competitive edge
Competitive edge life cycle
Building Customer Value – always the strongest
competitive edge – How IS brings value
Opportunity for identifying strategic usage of information's systems - Find out out
what value in each chain does it provide in adding value to customer or vendor and
its impact on CV and Vendor and then identifying suitable IS strategies if any

Value Web ???

 Home Task
• “How Information Gives You Competitive
Advantage” by Michael E. Porter and Victor A.
Millar, HBR July-August 1992
• https://hbr.org/1985/07/how-information-
gives-you-competitive-advantage
 Business process Reengineering
• Information technology is a key ingredient in
reengineering business operations because it
enables radical changes to business processes
that dramatically improve their efficiency and
effectiveness. Internet technologies can play a
major role in supporting innovative changes in
the design of workflows, job requirements,
and organizational structures in a company.
 Agile
• Becoming an Agile Company. A business can use
information technology to help it become an agile company.
Then it can prosper in rapidly changing markets with broad
product ranges and short model lifetimes in which it must
process orders in arbitrary lot sizes; it can also offer its
customers customized products while it maintains high
volumes of production. An agile company depends heavily
on Internet technologies to help it respond to its customers
with customized solutions, and to cooperate with its
customers, suppliers, and other businesses to bring products
to market as rapidly and cost effectively as possible.
Agile Company
 Virtual Company
• Creating a Virtual Company. Forming virtual companies
has become an important competitive strategy in today’s
dynamic global markets. Internet and other information
technologies play a key role in providing computing and
telecommunications resources to support the
communications, coordination, and information flows
needed. Managers of a virtual company depend on IT to
help them manage a network of people, knowledge,
financial, and physical resources provided by many
business partners to take advantage of rapidly changing
market opportunities.
Virtual Company
 KMS
• Building a Knowledge-Creating Company. Lasting
competitive advantage today can only come from
the innovative use and management of
organizational knowledge by knowledge-creating
companies and learning organizations. Internet
technologies are widely used in knowledge
management systems to support the creation and
dissemination of business knowledge and its
integration into new products, services, and
business processes.
 Q&A
• How do we develop Strategy such that it is aligned
to overall Business Stratgy
 Organizational & Strategic Planning
• .
• Strategic planning - Strategic planning deals with the development of an organization’s mission, goals,
strategies, and policies. Corporations may begin the process by developing a shared vision using a
variety of techniques, including team building, scenario modeling, and consensus-creating exercises.

Strategic Planning
Business/IT Architecture Planning
 Business/IT Architecture Planning
• Both the CEO and the chief information officer (CIO) of a company must
manage the development of complementary business and IT strategies to
meet its customer value and business value vision. This coadaptation
process is necessary because, as we have seen so often in this text,
information technologies are a fast-changing but vital component in many
strategic business initiatives. The business/IT planning process has three
major components:
• Strategic Development . Developing business strategies that support a
company’s business vision, for example, using information technology to
create innovative e-business systems that focus on customer and business
value. We will discuss this process in more detail shortly.
• Resource Management . Developing strategic plans for managing or
outsourcing a company’s IT resources, including IS personnel, hardware,
software, data, and network resources.
• Technology Architecture . Making strategic IT choices that reflect an
information technology architecture designed to support a company’s e-
business and other business/IT initiatives.
 Business/IT Architecture Planning
• Information Technology Architecture -The information technology architecture that is
created by the strategic business/IT planning process is a conceptual design, or blueprint,
that includes the following major components:
– Technology Platform . The Internet, intranets, extranets, and other networks, computer
systems, system software, and integrated enterprise application software provide a
computing and communications infrastructure, or platform, that supports the strategic
use of information technology for e-business, e-commerce, and other business/IT
applications.
– Data Resources. Many types of operational and specialized databases, including data
warehouses and Internet/intranet databases (as reviewed in Chapter 5) store and provide
data and information for business processes and decision support.
– Applications Architecture . Business applications of information technology are designed
as an integrated architecture of enterprise systems that support strategic business
initiatives, as well as cross-functional business processes.
– IT Organization . The organizational structure of the IS function within a company and the
distribution of IS specialists are designed to meet the changing strategies of a business.
Business Application Planning