Change within any organisation can affect the business in an essential way, and it could have a positive or a negative effect. I personally think it will depend upon how carefully the change has been considered, before it has been implemented.
My main aim is to identify an appropriate strategy to be put into place within A2Z Computer Solutions.
- Define SME's
- To understand how IT/IS has evolved over time
- To analyse the different strategic models that identify IT/IS capabilities
- To identify different strategic information systems
- To analyse the disadvantages of Strategic models
- To gain an overview of A2Z Computer Solutions
- To evaluate IT/IS in A2Z Computer Solutions
- To identify a SIS suitable for implementation at A2Z Computer Solutions
- Whether this change would benefit A2Z Computer Solutions
Information for the dissertation will be gathered from journals, books, newspapers and Internet sources. Another useful type of research would be to use Quantitive and Qualitative analysis, as well as the application of secondary sources as mentioned.
“Seeking through the methodical process to add to one's own body of knowledge and, hopefully, to that of others, by the discovery of non-trivial facts and insight” (Howard and Sharp, 1983).
Quantitative research will be used to gain rich information, which will basically observe the ‘expert' opinions from relevant areas of expertise, for the use of research.
“A major advantage of the interview is its adaptability, a skilful interview can follow up ideas, probe responses and investigate motives an feelings, which other methods of retrieving information can never do”(Bell, J.1999).
The Qualitative research will consist of a questionnaire with open- ended and various closed questions. This questionnaire will be passed out to a number of employees of A2Z Computer Solutions. The feedback from the questionnaires will assist me whilst analysing how effective the new system is for the organisation.
I will also be using several relevant books during the research stage. The reason for choosing this particular method is that it allows me to gain a variety of views on the same topic, which will be very useful for being critical in the literature review, (e.g. Strategic Planning for Information Systems)
I will be using the Internet to retrieve useful information. There are many advantages of using the Internet, for example, it disseminates the appropriate information in a matter of seconds, and also required information is accessible from anywhere at anytime.
I will also try to look at relevant case studies as examples, in order to obtain improved knowledge and gain more detail and relevance. I will also use journals for the same reason, as they will provide detailed and specific information, which will be required. (E.g. Ieee intelligent systems)
Newspapers will also be valuable in gaining applicable information, as they may contain relevant up-to-date information, which may assist with the completion of my dissertation. (E.g. Financial Times)
All research involves the collection and analysis of data. This could be done through means such as reading, observations, measurement asking questions or a combination of these. The data collected during and for research may, however, vary considerably in its characteristics. For example, numerical, verbal or could be a combination of the two.
Research is a very important aspect for any report which is in they process of being composed; not only can the study present results which will develop further more the knowledge and understanding, it could also provide suitable justifications for conclusion, addressing business matters and asserting academic argument.
“A set of principle of method which in any particular situation has to be reduced to a method uniquely sited to that particular situation” (Information systems development methodologies, Techniques and tools; 1995)
In order to perform independent research the hybrid research techniques has been put into force.
Hybrid Research Methodology
Conveying Quantitive methods of research provides the possibility to compare and contrast large sums of data, which will enable a more superior set of results. On the other hand, ‘qualitative approaches seek to achieve greater insights into individual perceptions, which arrive at more realistic conclusions rather than reaching statistical scrutiny' (Bell 1993).
A Hybrid approach can encapsulate positive factors from both the approaches. In view of this, I adopted the hybrid approach. This can therefore assist when carrying out Quantitive and Qualitative methods of research. ‘The combination of qualitative and Quantitive methods can complement each other where each fail' (Miles and Huberman 1994).
Primary research is carried out by monitoring subjects in natural Environments. Due to this, such data is suitable for the means required. Whilst on temporary employment I was able to observe employees of the organisation as well as business operations this included both participant and non-participant observations.
An interview is a focused conversation between two or more people. The groundwork of observed data was further carried out by in-depth interviews this was to gain further information regarding opinions of employees. There was a mixture of open and closed questions, although the aim was to use open questions wherever possible in order to gain particular attitudes. Employees throughout the hierarchy were interviewed in order to ascertain their individual views regarding the organisation, both internally and externally. The use of interviews, as opposed to statistical analysis, was to gain individual points of view. This approach has been encouraged by (Easterby-smith et al 1991) who believes that interviews are the most effective methods of research. One advantage of interviews is that, it allows for greater depth than is the case with other methods of data collecting.
A disadvantage on the other hand, is that it is prone to subjectivity and bias on the part of the interviewer.
There were two types of questions that were asked within the interview processes
- Closed questions.
- Open-ended questions.
The advantage gained from closed questions is that it helps achieve greater consistency of measurement and therefore gives greater reliability. The disadvantage on the other hand would be in relation to some responses as the alternative chosen may not be a clear representation of the respondent.
Open ended questions have a number of advantages they are flexible and allowed myself to probe, so that if chose I could go more in-depth with any chosen question, or clear up any misunderstanding.
In order to gain opinions from a wider group of employees, questionnaires were distributed randomly throughout the organisation. Sanders et al 1997 believes that questionnaires are an efficient and useful means of gathering data from a large sample. The questionnaire was made up of open and closed questions. This allowed extensive views, whilst at the same time it was imperative for it not to be excessively tedious, thus allowing a higher percentage of returned questionnaires.
The questionnaire differs somewhat to the interview, and it is recommended that open-ended questions be avoided, as some questionnaires cannot probe the respondent to ascertain precisely what he/she means by a particular response.
‘Secondary data can reveal unpredicted or unexpected new discoveries' (Dale et al 1988). The secondary research carried out included articles from the Internet, statistical business data, alongside various academic and business literatures. The secondary research gained will allow me to review the findings and the conclusion.
It is important to adopt a systemmatic approach whilts conducting the reseacrh in order to minimise irrelevant data.
Saunders et al (1997), ‘Research Methods for Business Students
Association Of Applied Research
The purpose of this study is to investigate the effects of various strategic models of Information Systems (IS) and Information Technology (IT). However, before further investigation can take place, a definition is required of IT. A popular reference used to define the essence of IT is shown in the following quotation.
“The enabling mechanism which facilitates the processing and flow of this information, as well as the technologies used in the physical processing to produce a product or provide a service” (Peppard, 1993).
There is no doubt that IT now plays a major role in all types of businesses, and in personal life. Technology is developing rapidly and businesses need to be aware of this. As technology is improving, it is important for businesses to modify their technology in order to maintain their levels of high service, and to be competitive. IT/IS is an important strategy within a business and no business is complete without one
“No business strategy is complete without an IS/IT strategy” (Peppard, 1993).
Many businesses have found it difficult to implement the right technology for its organisation. There have been a number of stages that IT has gone through since the first time it was introduced. This is shown briefly below. It also allows us to obtain an overview of how the use of IT has changed within organisations, and what stage it is currently at. For this, we must gain a rough idea of what system A2Z Computer Solutions should consider implementing.
The use of IT first started in the 1950's, but only became significant in the mid 1960's. Technology has evolved over time within organisations. When IT was first introduced, it was frequently used on an everyday basis to undertake operational tasks. Nowadays, it has become more complicated as businesses have become more competitive and therefore, using IT for the sole purpose of completing operational tasks is not enough. IT plays a strategic role in organisations and is critical for its survival.
The first era was one, which is frequently known as the data processing era, and this started from the 1960's onwards. This, in most cases, was implemented by organisations in order to improve operational efficiency. This was achieved by automating operational efficiency (Young, 2002).
The second era was the Management Information Systems (MIS) era, which started from the 1970's onwards. This was implemented in order to increase managerial effectiveness by satisfying their information requirements. (Ward 1997).
Young (2002), further states that the level of information provided is enhanced and therefore, improves the decision making process. This, in turn, improves the managerial performance.
The third and current era is the Strategic Information Systems (SIS). This is implemented within businesses in order to improve competitiveness by altering the nature or conduct of the business.
From the third era, the concept of Information Systems (IS) was derived, and is widely used within businesses. This leads onto the distinction of IS from IT. This can be shown by the following quotation:
“The flow of information in an organisation and between organisations,encompassing the information the business creates, uses and stores” (Peppard, 1993).
IT and IS covers a wide range of markets and sectors, such as computing, health and legal.
The market to be investigated in more detail is the retail sector, as A2Z Computer Solutions fits into this segment perfectly. The retail sector in itself, is such a broad and diverse sector and ranges from large multinational companies down to sole trader. The research will be based on the area of small to medium-size enterprises (SME's) for 2 reasons:
A2Z Computer Solutions can be described as an SME.
It is a relatively new market within the retail sector.
Therefore, IS/IT has not been utilised to the maximum potential. This provides a great insight within the new niche of market. SME's will be discussed in more detail below.
3.1 What are SME's?
There is no single definition of what an SME consists of. This tends to vary in different countries and is also dependant on the sector the organisation belongs to.
“A general definition of SME's is not possible. The concept varies from country to country and sector to sector” (Popadopoules, 1991).
The above quotation implies that each country has its own definition of an SME. For example, a small sized company in the UK must satisfy at least two of the following criterion:
- A turnover of no more than £2.8million
- A balance sheet total of no more than £1.4million
- Not more than 50 employees
A medium-sized company in the UK must satisfy at least 2 of the following criterion:
- A turnover of no more than £11.2 million
- A balance sheet total of no more than £5.6 million
- No more than 250 employees.
The above is stated under section 248 of the Companies Act of 1985. It clearly states exactly what is required to become an SME in the UK. However, the European Commission later set out general rules to what SME's must consist of which is now universally followed by communities throughout Europe. This is shown in the table below:
This table enables us to make a contrast to the definition of an SME in the UK. There are many similarities between the two; for example, the number of employees in a small sized enterprise must be no more than 49 according to the European Commission whereas under the Companies Act of 1985, the maximum number of employees for a small sized company in the UK is 50. There is only a difference of one employee between them, which is not of great significance. For an SME organisation to operate, it must consist of certain criterion known as ‘Business Strategies'
Firstly, there is a need to understand what a strategy is.
3.2 Business Strategy
There are many definitions that are available in order to define what a strategy is. An example of one of the very many is given below:
“An integrated set of actions aimed at increasing the long-term well-being and strength of the enterprise relative to competitors” (Ward, 1997).
A strategy of an organisation is a set of targets, established by the organisation itself, relating to the business activities. The strategy is put into place with the purpose of directing the organisation to meet its targets, which are clearly crucial for the survival of the organisation. SIS is a relatively new concept, which has been suggested by a number of authors, but has not been implemented by many business organisations, especially within the retail sector.
According to Peppard (1993), by having the correct IS/IT in place along with the appropriate business strategy, it allows for new management and business opportunities, which can be applied strategically in different ways, the main four being:
- To gain competitive advantage
- To improve productivity and performance
- To facilitate new ways of managing the organisation
- To develop new businesses
Through investigation of A2Z Computer Solutions, the need to implement a new Information System (IS) strategic model has been recognised and accepted through the position within its market. The main aim of the literature review is to understand the theories involving the areas of implementation and IS strategic models, in order to assist the observed research and investigation.
To begin my literature review, I will look into IS strategic models. The theory on this topic has been gathered and analysed using many authors within this field to help distinguish strategies that can be implemented into the organisation in the form of IS. As a reflection of this, I will look into the implementation of the strategic models. The information on implementation has been collated and presented in many journals and literatures by a number of authors, which I will use in the completion of the literature review.
The information will be a valuable source for the purpose of my dissertation.
4.2 IS Strategic Planning
Business strategy is a key issue for every major organisation. Traditionally, creating a vision and objectives, along with a high level course of action to achieve the objectives, this forms formal strategic planning. As time has gone by, the focus on planning has been modified with the term ‘strategic management'.
‘To reach the pinnacle of strategic management, a company must have a sound strategic planning framework, a widespread strategic thinking capability, the right motivational system and management values, and a good system for negotiation and review' (Gluck et al., 1980).
‘… Business strategy is about … competitive advantage. The sole purpose of strategic planning is to enable a company to gain, as efficiently as possible, a sustainable edge over its competitors' (Ohmae 1983).
‘Effective strategies tend to emerge from a series of strategic subsystems each of which attacks a specific class of strategic issues in a disciplined way, but which are blended incrementally and opportunistically into a cohesive pattern that becomes the companies strategy' (Quinn 1978).
From the quotes above it has come to my understanding that strategic planning implies an attempt to alter a company's strength in relation to its competitors, in the most efficient and effective way. The level of strategic planning implemented by an organisation will have a consequential effect on the success of the company in relation to its competitors.
The foremost principle of this section was to highlight the importance of strategic planning before any IS strategic model could be successfully implemented with an organisation.
There are many models that assist with strategic planning which have been drawn up by a number of different authors, these are explained in further detail below:
4.3 Audit Commission Model
This is a very simple but effective model, which illustrates the conceptual underpinning of information strategy planning. This model has been suggested by the Audit Commission, which is a UK based organisation and is responsible for monitoring and the control of primarily public sector organisations.
Define objectives- this looks at what changes could be made with the development of IT/IS. This can be related to the organisation's problems or issues of concern.
IT briefing for management- this would include the potential for the use of IS. At this stage it allows the senior managers to be aware of the latest development in the field. This will include the development of new technology to innovative uses of IS.
It is important to note that the success at this stage is dependant on the level of communication being executed. Looking at the advantages the future technology provides, and proving that it is an investment worth pursuing can do this.
Defining the Information strategy- by careful planning at this stage it will allow high levels of objectives to be fulfilled. This also will enable the user to specify the outcomes that may be achieved from using this technology. The outcome can be measured in terms of cost reductions, efficiency gains, or increased transactions processed.
Defining the IT/IS strategy- at this stage it is required to decide how the objectives within the information strategy are going to be achieved. This will depend on the understanding of the current IT/IS resources and what it is capable of. From this, planned changes can be made.
4.4 Ward & Griffith's Framework
Ward and Griffith first introduced the model in 1996. This was a framework that identifies the key processes that need to be put in place.
Previous IS/IT strategy- if there are strategies that are being currently used by the organisation, it is important to identify them, as this can help identify their limitations.
Business and technical environment - is a significant factor as IT has significantly changed over the last decade. New concepts such as object-orientated applications are also enabling innovation.
Other planning activity- has an impact and it may help or hinder depending on circumstances.
The model also outlines the planning process, which organisations could use:
Initiate planning process- this is the commencement of what Ward sees as a vital activity, namely the selling process to the organisation. To be involved at this stage there has to be genuine interest. Benefits need to be seen, problems need resolving and perceived needs addressed.
Review Business Strategy and understand current situation - it is necessary that the current business situation is fully understood at this stage and a complex situational analysis of the business would be undertaken.
Update information and systems architecture - this stage defines a proposed information model for the business along with the systems architecture needed to successfully deliver it. This is primarily intended as a directional tool to provide something to aim for.
Formulate IT strategy - the IT strategy will deal with the hardware and system software along with platform aspects. These are becoming considerably less problematic as particular platforms dominate individual sectors.
IT supply proposal - from the previous strategy definite proposals can be formulated for the acquisition of the required resources.
Prepare business case and migration plans - this stage interprets previous proposals in to detailed plans. The quality of the detailed planning will be a key factor in the implementation stage as implementation is the biggest hurdle for any planning activity.
4.5 Earls model (multiple methodology)
There are currently three major approaches to business system planning. They are the top-down clarification, bottom up evaluation and the inside-out innovation.
Top-down- this model essentially ‘puts the business into IS' (Earl 1989). The first step to be carried out is identifying the business objectives. This is mainly done through interviews and documents, and is closely followed by identifying the factors, which are critical to the success in achieving these goals.
This is done through interviewing the management team and obtaining their opinions. Once there has been overall critical success factors set for the firm, they can be then converted into activities that can be carried out by the organisation. This will require the introduction of IS that will support the critical success factors through the application of technology in products and processes, or the development of IS for co-ordinating and control of activities and for management decision-making.
Earl (1989) states that the managers found this approach especially valuable in setting and agreeing objectives and in deriving critical success factors across the business. This also improved their understanding of the current business activities that are very important, and how these activities can improve the overall business performance. This method therefore allows an organisation to define its business strategy. From this, it is possible to identify the IT/IS that can be potentially used to satisfy the business needs.
Bottom - up - this is not seen as a strategic model, it is an evaluative approach looking at the current IS of an organisation. According to Earl (1989), there are sets of questions that need to be addressed. This will be based upon the existing coverage of the system. This allows the current system to be examined and identifies the value of the system on the business.
This method tries to identify what the balance is between the business values and the technical quality. Once this has been identified, it is possible to suggest what needs to be done with the current system. For example, if the system is poor with that of the business values, there is a need to eliminate the current system and implement a newer and more efficient system that complies with the business values.
Inside - out - the objective of this method is to identify opportunities by IT, which may yield competitive advantages or create new strategic options for an organisation. With this method there are three strands involved. The first is based on techniques, the second is on processes and the third is on technology. The whole method is based on creativity unlike the other two that are based on analysing and evaluating.
This methodology could be criticized on the basis of its excessive impetus on the management. The three approaches used give a need for strong management of each activity and also needs powerful support at all organisational levels, in order to create the desired output from 3 dissimilar inputs.
Therefore, in my personal opinion, Ward and Griffith's framework for strategic planning is the most efficient proposal. This is because it gives a comprehensive view of the current business situation. Secondly whereas other models may be criticised as being out-dated, this model could be described as being a valuable tool for the future and this is particularly in relation to the potential for innovation from IT/IS.
The model also gives detailed plans for implementation along with details of management responsibilities.
4.6 IS Strategic Models
‘…A strategic model of a business of a corporation summarises the future policies of the business that will prepare it to perform in the future.' (American Society For Engineering Management, Mar 2002).
A business model is a concept of a business, identifying how that corporation profitably makes money. Business models are abstracts about how various inputs into an organisation are successfully altered to value adding outputs. Betz below reiterates this theory.
‘All models of organizations are models of a kind of ‘open system'' (Betz, 1968 American Society For Engineering Management).
4.7 Current position of Business within market sector
In addition to the strategic planning, it is important to understand the full details of the organisation. There is a need to understand the current business needs. In order to understand the business needs, there is a requirement of a complete situational analysis that needs to be undertaken.
This can be done by applying a number of models to the organisations and then studying the results. From this, it is possible to obtain the current position the organisation is at. For this to be done, there are a number of factors and models that need to be looked at, which are explained in detail below.
‘The IS/IT strategy is derived from the business strategy' (Peppard, 1993).
All organisations should have a mission statement. This defines the sole objective of the organisation. It consists of a few sentences that contain the key targets that the organisation has set itself. It is crucial to have a mission statement, as it reflects the key strategies an organisation has in the near future.
Once a mission statement is in place it is important to set out objectives in how to achieve the mission. A definition of this is:
‘Statements of specific outcomes that are to be achieved' (Johnson and Scholes, 2002)
Culture/ Life cycle (Bathtub model) Culture of an organisation (Williams, 2002)
An organisation can be one of the following:
Innovator- this is an organisation that is ahead of competition, they pursue the development of IS and do not regard the cost of investing in IS as a barrier. This organisation is the creator with new ideas.
Follower- this is an organisation that concentrates on efficiency of operation to ensure competitive pricing and reducing costs so that it can compete with the innovator. The IS used here will therefore be less dynamic and the investment tightly controlled.
Dinosaur- this is an organisation that is unlikely to invest in IT/IS. Saving costs is a high priority and IS development is unheard of. Such businesses are unlikely to develop their systems and hang on for as long as possible before dying or being taken over.
The Business Life Cycle (also known as the bath-tub curve) can be used to identify what stage an organisation is at in terms of competitiveness.
Growth- businesses that are on the upward incline are growing. They have very high costs, but the profits are also growing. Businesses that are at this stage will gradually need to invest in a IS in order to develop their business further and to increase profits.
Maturity- businesses that are at the maturity stage have low costs and good profits making them stable. Sooner or later they will need to update their systems as IS tends to become obsolete due to the dramatic expansion of technology.
Dying- these are businesses that have falling profits and at the same time the costs are increasing. Businesses at this stage may not have enough money to invest in IS as they would like, but they will have to develop or strengthen their strategy in order to remain competitive.
4.8 SWOT Analysis
A SWOT analysis consists of:
This technique consists of the internal and external environmental factors, which are an important part of the strategic planning process. The strengths, weaknesses, opportunities and threats provide information that is helpful in matching the organisations resources and capabilities to the competitive environment in which it operates. (Quickmba.com/strategy/swot/, 2003) The strengths and weaknesses look at the internal factors while the opportunities and threats looks at the external factors.
A definition of a SWOT analysis is shown below:
“Offers headings under which to classify any number of aspects of a situation”(Robson, 1997).
4.9 PEST Analysis
A PEST analysis looks at the following factors:
These are the environmental factors, which are currently important to the organisation. There are similarities between PEST and SWOT analysis, the Opportunities and Threats of the SWOT analysis can be incorporated to the analysis gained through examining the PEST of an organisation.
PEST Analysis is important to an organisation as it considers the environment before beginning the strategic process.
Environmental analysis should be continuous and feed all aspects of planning.
The organisation's environment is made up from:
1. The internal environment e.g. staff (or internal customers), office technology, wages and finance, etc.
2. The microenvironment e.g. external customers, agents and distributors, suppliers, our competitors, etc.
3. The macro-environment e.g. political (and legal) forces, Economic forces, Socio-cultural forces, and Technological forces.
4.10 Porters 5 forces
This is a model used to analyse the different competitive forces that affect an organisation in their current position. This model looks at all possible external threats to the organisation. This force describes the intensity of competition between existing players (companies) in an industry. High competitive pressure results in pressure on prices, margins, and hence, on profitability for every single company in the industry.
The five forces are:
Rivalry amongst existing competitors- this will determine the immediate competitive position of the organisation. This will also depend on the number of firms that are already in the industry. According to Robson (1997), the rivalry can range from intense in a cutthroat industry, to mild in an affluent and affable one.
Threat of new entrants- a new entrant in an industry will cause the existing competitive situation to be disrupted (Bocij et al, 1999). If competition in an industry is high, it is easier for other companies to enter the industry. If this happens it is possible for the new entrant to change major determinants of the market environment (such as market shares, prices, customer loyalty) at any time. The threat of new entries will depend on the extent to which there are barriers to entry.
Threat of substitutes- A threat from a substitute only exists if there is an alternative product/service to that of which you supply is of lower prices and of better performance for the same purpose. The danger here is that a company may lose its market share if a rival can supply a substitute that more closely matches the needs of certain customers.
Power of buyers- the term ‘customer is king' can be used here. The reason for this is that they can exert power by threatening to switch their purchasing to an alternative supplier. The prices need to be suitable for the buyers and is of high importance to a business.
Power of suppliers- suppliers can have a major effect on an organisation just like competitors. For example, if a situation arises where certain material is in short supply, the organisation is going to be at risk from its competitors who will be bidding higher prices for the material. Whoever bids the highest will buy the material.
Porter's ideas have been heavily criticized with the development of the Internet economy during the last decade. Critics have pointed out that economic conditions have changed with the development of this economy.
Porter's theories are largely based on the economic situation in the 1980's, which contained strong competition, cyclical developments, and relatively stable developments. A major critic of Porter's ‘Five Forces' model is Larry Downes, co-author of ‘Unleashing the Killer App: Digital Strategies for Market Dominance', who stated that these beliefs are no longer feasible in today's society. Downes identifies 3 new forces that require a new strategic framework, namely digitalisation, globalisation and deregulation. These are outlined below:
Digitalisation: This states that as the power of IT grows, all companies in a market will have access to an additional amount of information.
Globalisation: improvements in distribution logistics have enabled companies to buy and sell to a global market. Customers can benefit from this as they now have the ability to compare prices on a worldwide market.
Deregulation: the influence of a government in the business sector has gradually decreased over a period of time.
Downes pinpoints information technology as the key difference between the ‘Porter
Worlds and the world of his proposed forces. Whereas technology is the most important factor in today's business, it was merely used as a tool for implementing change in the 1980's. Downes also criticises Porter's models as focusing too much on the economic conditions of their era of origin i.e. the 1980's.
Other criticisms of the model include the fact that in an economic sense, the model assumes a ‘classic perfect market'. The model assumes relatively static market structures, and this is not applicable in contemporary markets.
Personally, I believe that Porter's Five Forces Model is severely restricted in today's markets. It does not deliberate on new business models and the dynamism of markets. However, it does enable organisations to reflect on the current condition of their industry in a structured and understandable way. It can be regarded as a beginning for a more complex analysis of the business.
4.11 Stages of growth models
‘All models of organizations are models of a kind of ‘open system' (Betz, 1968 American Society For Engineering Management).
There have been a number of stages of growth models that have been presented in order to understand the developing sophistication of IS use and management. These have been updated through time with new versions. The basic objective behind these models, is that any organisation can move through stages of maturity with the appropriate use and management of IS.
The stages of growth models attempt to help managers interpret the position of their organization with IS. According to Robson (1997), the stages of the growth model gives us a better understanding of the factors influencing the strategy so that the management are able to do a more successful job of planning.
A prominent example of this is the ‘Value Chain' model of Michael E Porter in his book ‘Competitive Advantage: Creating and Sustaining Superior Performance' (1985).
4.12 Value Chain
This was a model created by Porter to study the possibilities of gaining a competitive advantage through different aspects of a business. The model allows a look at the activities of a business in terms of ‘strategically important activities', which are known as ‘Value activities'.
‘The value chain describes the activities within and around an organization which together creates a product or service' (Johnson G and Scholes K, Exploring Corporate Strategy Text and Cases, 6th Ed, Harrow, England, Prentice Hall, 2002).
(Bocij et al, Business information systems: Technology, Development, and Management, Prentice Hall)
This concept can be helpful in understanding how value is created or lost. This allows an organization to assess how effectively the resources are being used at various points of the value chain.
Porter distinguishes between primary activities and support activities:
‘Primary activities are directly concerned with creation or delivery of a product or service' (Johnson G and Scholes K, Exploring Corporate Strategy Text and Cases, 6th Ed, Harrow, England, Prentice Hall, 2002).
There are 5 main areas related to primary activities namely:
Inbound logistics - these are activities concerned with receiving, storing and distributing the inputs to the product or service.
Operation - these are various inputs that transform into the final product or service.
Outbound logistics - these collect, store and distribute the product to customers.
Sales and marketing - this provides the means where by consumers/users are made aware of the product or service and are able to purchase it.
‘ Support actives help to improve the effectiveness or efficiency of primary activities'(Johnson G and Scholes K, Exploring Corporate Strategy Text and Cases, 6th Ed, Harrow, England, Prentice Hall, 2002).
There are 4 main areas relating to the support activities they are:
- Procumbent - this supports the process of purchasing inputs for all the activities of the value chain. Such inputs include office equipment, raw materials and IS.
- Technology development - all value activities have a technology even if it is just basic (Johnson G and Scholes K, Exploring Corporate Strategy Text and Cases, 6th Ed, Harrow, England, Prentice Hall, 2002). This includes the development of the technology for the product or service, the processes that produce it and the processes that ensure the successful management of the organisation. It includes traditional research and development activities.
- Human resource management- this is an important area which transcends all primary activities. It is mainly concerned with the activities involved in recruiting, managing, training, developing and rewarding people within the organisation.
- Infrastructure - this supports the entire value chain and includes systems of planning, finance, quality control, information management etc. These are crucially important to an organisations performance in its primary activities.
4.13 Nolan's 6-stage model
The first ever stages of growth model was introduced by Nolan in 1974. Since then, there have been a number of updates to the model in order to adapt to modern IS life.
A definition of the Nolan's model is;
‘ This is a 6 stage evolutionary model of how IS can be applied within a business' (Bocij, P. et al. (1999) Business Information Systems: Technology Development and Management. London, Prentice Hall).
The model uses the organizational technology budget as an indicator to signal a number of discrete stages, which are characterised by recognisable objectives, management polices, levels of user proficiency in computing and spending. The model was altered between 1969 and 1979 and included 6 stages in its final stage. These stages are:
- Initiation - which is the introduction of computing but includes various technical/user problems.
- Contagion - this is the rapid growth of use and development however there is little control or planning.
- Control - where the planning and cost control are instituted into the organization.
- Integration - which is the levelling of cross growth with respect to benefits.
- Data administration - this is not well defined and portrays into management organisation data as a high priority.
- Maturity - where by the application portfolio is complete and mirrors organisational data flow.
John King and Kenneth Kraemer criticise the model in a number of areas. Firstly, there is little empirical evidence, which support the model s basic assumptions. Also there is little support for the existence of the particular stages and further more they stated that organisations have rarely entered the maturity stage. Secondly, Nolan placed a high emphasis on technology as the ‘driving force of change'.
King and Kraemer described a number of variables, which helped to explain the evolution of computing in organisations. These are known as ‘supply push' and ‘demand pull' variables. ‘Supply push' is the existence of the technology drives the effort to employ it to good use. ‘Demand-pull' states that the need for more powerful tools drives the effort to create the technology.
Another criticism is that Nolan's model ‘improperly assumes explicit organisational goals' related to the development and use of technology. King and Kraemer also criticise the model on the basis that it is evolutionist and also it is so vague as to provide little means to empirically prove or disprove the assertions of the model. It is inappropriate for making prescriptions for management policies on the future.
4.14 Seven Ss (Pascale & Athos, 1981 as featured in Galliers and Sutherland)
The seven Ss are used in the analysis of organisational processes and management. The model attempts to bring together the key elements that are associated with the operation and management of an organisation.
The above model considers the element of each of the Seven ‘Ss' in the context of each stage during the growth of IT utilisation and management. Basically this model uses the ‘S' elements in order to describe the IT functions and the provision of IT services rather than the organisation overall.
From obtaining the description of each of the ‘S' elements in each stage of the model, an indication can then be provided of what might be done to move into the next stage of the model. The indicators are based on what constitutes the Seven ‘Ss' in the next stage.
Stages of growth model (7S's & 6 stage model together)
There are also other stages of growth models, which links the ‘Seven Ss' with Nolan's Six-Stage model. The principle behind it is the same as that of the ‘Seven Ss' and Nolan's Six-Stage model.
4.15 McFarlan's Strategic grid
This is a matrix model that was developed by McFarlan (1993). A quotation to define this is shown below:
“This model is used to indicate the strategic importance of IS to a company now and in the future” (Bocij et al, 1999).
The matrix model that was developed is used to consider the contributions that are currently made by the organisation's IS and also the possible impact of future IS investment.
The McFarlan's grid is split into four segments. I am now going to explain what each segment is:
Strategic- this indicates that the business depends on both its existing IS and needs to continue investing in IS in order to sustain continued competitive advantage.
Turnaround- this suggests that a business in this position does not necessarily obtain competitive advantage with its current IS, therefore future investment in this area has the potential to positively affect the business's competitive position.
Factory- this suggests a business in this segment does have competitive IS, but doesn't imagine further IS investment having a positive impact on its competitive position.
Support- this suggests that the organisation believes that it will not gain any significant competitive advantage from IS It is important to note that this model may not be used by all organisations, as not every company aims to move to a high strategic importance for IS. It has also been criticised by Hischheim et al (1988), who find this model being too simplistic, since most companies have IS that falls into all four categories.
Critical Success Factor (CSF)
Critical success factors can be defined as:
“CSF's are measures which indicate the performance or efficiency of different parts of an organisation. Good performance of processes measured by these factors is vital to the business unit or organisation” (Bocij, P. et al. (1999). Business Information Systems: Technology Development and Management. London, Prentice Hall).
The quote above clearly states the importance a CSF analysis can have on an organisation. CSF's identify the key areas in which the performance has to be of a good standard in order for the organisation to survive and be successful. This technique of analysis is also known as one of the most useful for an organisation in pinpointing what its precise information needs is.
Once the strategic model is determined, the next stage of the process is the implementation of the model into the organisation. However, this stage is one of the most problematic as outlined below.
‘Brilliant strategic thinking and magnificently prepared pieces of paper called ‘strategic plans' have little value unless implementation follows' (Denning B - Making Strategic Planning Work in Practice, Pergamon Press, Oxford, 1989).
Strategy implementation entails converting the strategic plan into action and then into results.
‘First you have to formulate your strategy. Without it, it's like kicking a ball with no goal and goal keeper in place.' (Alfred W.K. Chan)
Implementation is the challenge that comes at the end of all new (and old) methods for improving the organisation.
‘In the world of management, increasing number of senior people are recognising that one of the key routes to improved business performance is better implementation'
(Renaissance solutions Ltd, 1996)
It is also understood at the same time that ‘implementation is one of the more difficult challenges facing today's managers' (Pfeeffer, 1996).
It is clear that if an organisation wants to be a success within its market as well as competitive it is very important to think implementation through very carefully and carry it out until till the end. (Until it has been implemented).
While the details of strategy implementation are specific to every situation, certain administrative bases have to be covered no matter what the organisations situation.
‘…Despite a large inventory of methods/models that currently exist, the potential benefits that could accrue from the use of these models have not been fully realized due to lack of implementation' (Alter, Steven, ‘Implementation risk analysis' 1976).
It is said that implementation is still in its infancy. It is generally accepted that there is a keen interest in both implementation theory and practice. As a result of this managing towards successful implementation of a new strategic model requires a good knowledge base understanding of the aims and goals.
Strategies can be implemented by making rational decisions about policies, which may already exist within the company or may need drawing up. A primary starting point is a financial policy or a familiar budgeting system, which can consequently be developed into a financial strategy.
However, there are certain problems involved with the implementation of a strategy, and Denning has outlined these. These include:
- Implementation took more time than was originally allocated.
- Major problems surfaced during implementation that had not been identified before hand.
- Co-ordination of the employees involved was not effective enough.
- Competing activities and crises distracted attention from implementation.
- Capabilities of employees were insufficient.
- Training and instruction given to lower employees was insufficient.
- Uncontrollable external factors had an adverse impact on the implementation.
- Leadership and direction provided by department managers was inadequate.
- Key implementation tasks were not defined in sufficient detail.
- Information systems used to monitor implementation were not adequate.
Denning, B., Making Strategic Planning Work in practice, Pergamon Press, Oxford, (1989).
As a result of the literature review, it has been brought to my attention that when implementing an IS strategic model into a business, there are many aspects that need to be taken into consideration. It is also important to follow the change through, from the beginning to its achievement, as it is normality in many cases for businesses to plan the change and not carry out the implementation through completely, this could be due to many reasons, as mentioned above.
The strategic model, which has been chosen to be implemented, needs to be considered very carefully as there are various models that could be selected. However, the vital question is, ‘is it the right one for the business?' There are many different ways to allocate the correct model to be implemented into the business and personally; I think it is very important to assign a relevant amount of time to select the right model for the business.
The various models available can help the business in many different ways, therefore, businesses must be able to decide on the model that will be the most beneficial to it, i.e. in my case I would select an appropriate model to help ‘A2Z Computer Solutions' to improve its competitive position.
Basically, I would say that the best procedure is for the organisation to have a clear, strong and motivating strategy, formulated using a proven strategic model.