notes on porter and wiseman model

8/10/2019 Notes on Porter and Wiseman Model

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Strategic information systems is a computer system that implement business strategies;

They are those systems where information services resources are applied to strategic

business opportunities in such a way that the computer systems have an impact on the

organizations products and business operations. Strategic information systems are always

systems that are developed in response to corporate business initiative.

Gaining competitive advantage

Some of the more common ways of thinking about gaining competitive advantage are:

Deliver a product or a service at a lower cost . This does not necessarily mean the

lowest cost, but simply a cost related to the uality of the product or service that will be

both attractive in the marketplace and will yield sufficient return on investment. The costconsidered is not simply the data processing cost, but is the overall cost of all corporate

activities for the delivery of that product or service. There are many operational computer

systems that have given internal cost saving and other internal advantages, but they

cannot be thought of as strategic until those savings can be translated to a better

competitive position in the market. Deliver a product or service that is differentiated . !ifferentiation means the

addition of uni ue features to a product or service that are competitive attractive in the

market. "enerally such features will cost something to produce, and so they will be the

setting point, rather than the cost itself. Seldom does a lowest cost product also have thebest differentiation. # strategic system helps customers to perceive that they are getting

some e$tras for witch they will willingly pat. Focus on a specific market segment . The idea is to identify and create market

niches that have not been ade uately filled. %nformation technology is fre uently able to

provide the capabilities of defining, e$panding, and filling a particular niche or segment.

The application would be uite specific to the industry. Innovation . !evelop products or services through the use of computers that are new

and appreciably from other available offerings. &$amples of this are automatic credit

card handing at service stations, and automatic teller machines at banks. Suchinnovative approaches not only give new opportunities to attract customers, but also

open up entirely new fields of business so that their use has very elastic demand.

Models for strategic information system


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Porters competitive advantage

'ichael &. (orter , (rofessor of )usiness #dministration, *arvard )usiness School, has

addressed his ideas in two keystone books. +ompetitive Strategy: Techni ues for #nalyzing

%ndustries and +ompetitors, and his newer book, +ompetitive #dvantage, present a

framework for helping firms actually create and sustain a competitive advantage in theirindustry in either cost or differentiation. !r. (orters theories on competitive advantage are

not tied to information systems, but are used by others to involve information services

technologies. %n his book, !r. (orter says that there are two central uestions in competitive

strategy:

How structurally attractive is the industry? What is the firms relative position in the industry?

)oth of these uestions are dynamic, and neither is sufficient alone to guide strategicchoices. )oth can be influenced by competitor behavior, and both can be shaped by a firms

actions. %t is imperative that these uestions be answered by analysis, which will be the

starting point for good strategic thinking, and will open up possibilities for the role of

information systems. %ndustry profitability is a function of five basic competitive forces:

the threat of new entrants the threat of su stitute products or services the argaining power of suppliers the argaining power of uyers and the intensity of the rivalry among e!isting competitors

(orters books give techni ues for getting a handle on the possible average profitability of an

industry over time. The analysis of these forces is the base for estimating a firms relative

position and competitive advantage. %n any industry, the sustained average profitability of

competitors varies widely. The problem is to determine how a business can outperform the

industry average and attain a sustainable competitive advantage. %t is possible that the

answer lies in information technology together with good management. (orter claims that the

principal types of competitive advantage are low cost producer, differentiation, and focus. #

firm has a competitive advantage if it is able to deliver its product or service at a lower cost

than its competitors. %f the uality of its product is satisfactory, this will translate into higher

margins and higher returns. #nother advantage is gained if the firm is able to differentiate

itself in some way. !ifferentiation leads to offering something that is both uni ue and is

desired, and translates into a premium price. #gain, this will lead to higher margins and

superior performance.
https://en.wikipedia.org/wiki/Michael_E._Porterhttps://en.wikipedia.org/wiki/Michael_E._Porter


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The basic idea is that the firms activities can be divided into nine generic types. ive are the

primary activities, which are the activities that create the product, market it and deliver it; four

are the support activities that cross between the primary activities.

The primary activities are:

In ound logistics , which includes the receipt and storage of material, and the

general management of supplies. "perations# which are the manufacturing steps or the service steps. "ut ound logistics , which are associated with collecting, storing, and physically

distributing the product to buyers. %n some companies this is a significant cost, and

buyers value speed and consistency. $arketing and sales includes customer relations, order entry, and price

management. %fter&sales services covers the support of the product in the field, installation,

customer training, and so on.

The support activities are shown across the top because they are a part of all of the firms

operations. They are not directed to the customer, but they allow the firm to perform its

primary activities. The four generic types of support activities are:

Procurement# which includes the contracting for and purchase of raw materials, or

any items used by the enterprise. (art of procurement is in the purchasing department,

but it is also spread throughout the organization. 'echnology development may simply cover operational procedures, or many be

involved with the use of comple$ technology. Today, sophisticated technology is

pervasive, and cuts across all activities; it is not -ust an /! function. Human resource management is the recruiting, training, and development of

people. 0bviously, the cuts across every other activity. Firm infrastructure is a considerable part of the firm, including the accounting

department, the legal department, the planning department, government relations, and

so on.


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Wisemans strategic perspective view

+harles 1iseman has applied the current concepts of Strategic %nformation Systems in work

at "T& and other companies, and in his consulting work as (resident of +ompetitive

#pplications, %nc. *is book, Strategy and +omputers: %nformation Systems as +ompetitive

1eapons, e$tends (orters thinking in many practical ways in the %nformation Systems area,and discusses many e$amples of strategic systems.

Strategic Thrusts. 1iseman uses the term strategic thrusts for the moves that companies

make to gain or maintain some kind of competitive edge, or to reduce the competitive edge

of one of the strategic targets. %nformation technology can be used to support or to shape

one or more of these thrusts. &$amining the possibilities of these thrusts takes imagination,

and it is helped by understanding what other firms have done in similar situations. There is

no uestion that there is considerable overlap between conventional information systems

and strategic information systems. Systems are comple$ and a great deal of data is involved.

The idea is to look at this comple$ity in a new light, and see where competitive advantage

might possibly be gained. 2ote that 1iseman takes (orters three generic categories: low

cost producer, differentiation, and focus, and e$tends them to five categories: differentiation,

cost, innovations, growth, and alliance.

(ost may be move that not only reduces the costs, but also reduces the costs of selected

strategic targets so that you will benefit from better treatment. # strategic cost thrust may

also aim at achieving economies of scale. The e$amples always seem obvious when they

are described, but the opportunities can usually only be uncovered by considerable search.

Innovation is another strategic thrust that can be supported or shaped by informationtechnology in either product or process. %n many financial firms, the innovative product is

really an information system. %nnovation re uires rapid response to opportunities to be

successful, but this carries with it the uestion of considerable risk. There can be no

innovation without risk, whether information systems are included or not. %nnovation,

however, can achieve advantage in product or process that results in a fundamental

transformation in the way that type of business is conducted.

Grown achieves an advantage by e$pansion in volume or geographical distribution. %t may

also come from product3time diversification. %nformation systems can be of considerable help

in the management of rapid growth.

%lliance gains competitive advantage by gaining growth, differentiation, or cost advantages

through marketing agreements, forming -oint ventures, or making appropriate ac uisitions.


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The Strategic (lanning (rocess.

*e describes his S%S (lanning (rocess in five phases:

Phase %) %ntroduce the %nformation Services management to S%S concepts. "ive an

overview of the process describe cases. "ain approval to proceed with an idea3generation meeting in %nformation Service.

Phase *) +onduct an S%S idea3generation meeting with %nformation Services middle

management. Test the S%S idea3generation methodology. %dentify significant S%S areas

for e$ecutive consideration. Phase () +onduct an S%S idea3generation meeting with senior %nformation Services

management. %dentify S%S ideas, and evaluate them together with the ideas from the

previous meeting Phase D) %ntroduce the top business e$ecutives to the S%S concept. !iscuss some of

the S%S ideas that were considered for the business. "ain approval to proceed with theS%S idea3generation meetings with business planners.

Phase +) +onduct an S%S idea3generation meeting with the corporate planners.

%dentify some S%S ideas and evaluate them together with the ideas that have emerged

from the previous meeting.

1iseman points out that the whole idea is designed to introduce the strategic perspective on

information systems, stimulate the systematic search for S%S opportunities, and evaluate and

select a set of pro-ects that are e$pected to secure the greatest competitive advantage for

the firm.1iseman says that typical S%S idea3generation meetings will last for days. &ach step takes

about two hours, at least. The process generates many good S%S ideas, and a few will

always be considered well worth implementation. Top management begins to focus their

attention on S%S opportunities. The ideas that are generated can produce significant

competitive advantage.

notes on porter and wiseman model

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