Sears found the answer first—fortuitously. And "where should the organization be going?Will information technology provide the leverage to expand the business globally? A dishwasher, for example, requires a control system that directs the various components of the unit through the washing cycle and displays the process to the user. Information Resource Management includes the management of all kinds of data, numbers, texts, images and sounds available in making the proper strategy at a certain moment. Today, information technology must be conceived of broadly to encompass the information that businesses create and use as well as a wide spectrum of increasingly convergent and linked technologies that process the information. The impact of information is significant for some companies. McFarlan, J. There is no standard source in the economics literature where a theory of business information is systematically set out. Information technology is also at the core of growing interrelationships in financial services, where the banking, insurance, and brokerage industries are merging, and in office equipment, where once distinct functions such as typing, photocopying, and data and voice communications can now be combined.
Changing industry structure The structure of an industry is embodied in five competitive forces that collectively determine industry profitability: the power of buyers, the power of suppliers, the threat of new entrants, the threat of substitute products, and the rivalry among existing competitors see Exhibit V.
Each value activity has cost drivers that determine the potential sources of a cost advantage. That is why a great quantity of information and its optimal use is needed especially by decision makers in the processes of decision making.
Industries such as airlines, financial services, distribution, and information suppliers see the upper right-hand corner of Exhibit IV have felt these effects so far.
These views of the future are likely to be cloudy and their probabilities are likely to be rough estimates.
Information processing at that time was mostly the result of human effort. To show the role of information as a competitive advantage of the company Michael Porter and Victor Millar found a matrix which indicates the effect of information on different industries.In addition to computers, then, data recognition equipment, communications technologies, factory automation, and other hardware and services are involved. Intermodal now uses microcomputers to link its offices to a center that calculates all prices. If diffusion is high and infusion is low then we will have a decentralized information system. The benefits of scope and the achievement of linkages , however, can accrue only when the information technology spread throughout the organization can communicate. Every organization must have some form of strategic management if it is considering "where is the organization going? The essential ingredients are vision, leadership and, increasingly, information which is both useful and actionable. Different activities require a different mix of the two components. The physical component includes all the physical tasks required to perform the activity. The result: drilling time is reduced and some well-logging steps are eliminated. Being "all things to all people" is a recipe for strategic mediocity and below-average performance because it often means that a firm has no competitive advantage at all. The company, suppliers, and channels can all benefit through better recognition and exploitation of such linkages. There are no longer mature industries; rather, there are mature ways of doing business.
Why we need a strategic Approach to Information Systems If we analyze the history of information systems and how they have been put to use in organizations, then we get to see three eras Ward Criticism of the traditional formal strategic management process could, but should not, be interpreted as abdication of responsibility by management.
If the target segment has unusual needs, broad-scope competitors will not serve it well.As information shifts away , business risks increases. Considerations when Implementing Information Systems Implementing information systems within an organization can prove to be costly. During the Industrial Revolution, the railroad cut the travel time from Boston, Massachusetts, to Concord, New Hampshire, from five days to four hours, a factor of By using information systems, companies can measure their activities more precisely and help motivate managers to implement strategies successfully. Automation and flexibility are achieved simultaneously, a pairing that changes the pattern of rivalry among competitors. Information systems allow companies to coordinate value activities in far-flung geographic locations. Adoption of information systems simplifies business processes and removes unnecessary activities. Usually the vice president of the IT department is in the Board of Directors. Retailers can run an ad in the morning newspaper and find out its effect by early afternoon. Information Storage and Analysis At the date of publication, many companies no longer manage their data and information manually with registers and hard-copy formats. Today information technology is spreading throughout the value chain and is performing optimization and control functions as well as more judgmental executive functions. A service activity uses information about service requests to schedule calls and order parts, and generates information on product failures that a company can use to revise product designs and manufacturing methods. The business uses information systems to evaluate information from all sources, including information from external references such as Reuters or Bloomberg, which provide information on the general economy. For a discussion of the two basic types of competitive advantage, see Michael E.
It is evident that the organizational relation between IT management and senior management is exclusively narrow and interdependent.
Develop a plan for taking advantage of information technology.How will advances in information technology affect competition and the sources of competitive advantage? Schlumberger has developed an electronic device permitting engineers to measure the angle of a drill bit, the temperature of a rock, and other variables while drilling oil wells. Companies that do not respond will be forced to accept changes that others initiate and will find themselves at a competitive disadvantage. These limits no longer exist, however. The new information technology makes it possible to customize products. In this sense the planning of information resources is of great value and should satisfy the needs of the organization. Can managers harness information technology to exploit interrelationships with other industries? On-time delivery requires that operations, outbound logistics, and service activities installation, for example should function smoothly together. To be the first , ITs have to be renewed continuously because of their short life cycle.