It Management

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Chapter 1. The Information Systems Strategy Triangle

Chapter Overview

This chapter presents a very simple framework, the Information Systems Strategy Triangle, which links business strategy with organizational strategy and information strategy. The chapter describes this model, and builds on several other popular strategy models and organizational models. The goal of this chapter is to make sure every student has a basic understanding of both strategy and organizations (in many management programs, one or both of these are either reserved for the most senior students or left out entirely). For students well versed in strategy and organizational behavior, this chapter is a review of key points from those two fields.

Key Points in Chapter

The Information Systems Strategy Triangle links business strategy with organizational strategy and information strategy. The use of the triangle is done to suggest that all 3 points are in balance in any organization, and if they are out of balance, then organizational tension or possibly crisis exists. A company is out of “alignment” when their business strategy is not supported by there IS. There are several implications from this model. First, business strategy drives organizational and information strategy; Second, organizational strategy must complement business strategy. Third, information strategy must complement business strategy. Fourth, organizational and information strategy should complement each other. Finally, if a change is made to one corner of the triangle, it is necessary to evaluate the other two corners to insure balance is maintained. That means that if the business strategy is changed (i.e. such as becoming a "bricks and clicks" company) then the manager must also consider redesign of both the organization (i.e. do we have people that can be successful in this new strategy) and the information systems (i.e. do we have the capability to process inquires taken off of the web).

Strategy is defined and the mission of the organization is covered (with several example mission statements (figure 1.2) and discussion of how Dell has creatively adjusted its business strategy to meet the rapidly changing computer industry.

There are several ways to describe business strategy. This chapter summarizes 2 well-accepted models: the Porter generic strategies framework and the D'Aveni hypercompetition model. Current examples are offered to illustrate the models.

The Porter generic strategies framework (Differentiation, Cost Leadership, Focus) has spawned many variants. Two are presented here: shareholder value model and unlimited resources model. Depending on the business objectives, a particular strategy is employed to achieve those objectives. Chapter 2 discusses strategic use of information resources, building on these and other models.

The chapter also summarizes several frameworks for describing organizational strategy. Included are the business diamond and the managerial levers framework. The business diamond links 4 key components of the organization: business processes, values and beliefs, management control systems and tasks and structures. The managerial levers framework is somewhat more comprehensive, linking organizational structure variables, control variables and cultural variables. Chapters 3 and 4 build on these frameworks and more fully flesh out how to work with organizational strategy. Chapter 5 builds on the business process concepts.

The information strategy suggested in this chapter, and embellished more fully in the architecture and infrastructure chapter, is a very basic model. This framework highlights the four components of the information system, the hardware, software, networking and data, and the key managerial concerns for each, what, who and where.

The Food for Thought section draws from Rosenzweigs “Misunderstanding the Nature of Company Performance: The Halo Effect and Other Business Delusions,”...
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