Strategic Information System

Topics: Strategic management, Management, Knowledge management Pages: 12 (3189 words) Published: February 20, 2013
Content Page
2.Companies using IS/IT to gain competitive advantages2
2.1Cigna HealthCare CRM System2
2.2Bank of America – MasterNet System2
2.3 American Airlines – Knowledge Management System2
2.4 Wal-Mart – Point-of-Sale System2
2.5Lesson Learned and Success Factors2

1. Introduction

Given the rise of competition in the modern business industry, it is essential for firms to apply strategic use of information system (IS) to achieve competitive advantage (CA).

In the recent years, top management of firms have little interest in the relationship between IS functions and corporate strategy leading to many problems because of failure in achieving strategies. According to Holsapple (2000), modern organizations are increasingly seen as knowledge-based enterprises in which proactive knowledge management is important for competitiveness. One of the major factors in competitive environment is knowledge management and companies for achieving the competitive advantage should concentrate in its IS.

IS plays an important role in business operations as well as financial and non-financial aspects of the firm such as decision making as a big role of management. There has a growing realization to make ISs of strategic importance to an organization in the 80’s and 90’s. Systems that shape or support business unit’s competitive strategy are known as Strategic IS (Callon 1996, an Neumann 1994). According to Turban et al (2006), SIS is the ability to significantly change the manner in which business is conducted in order to give the firm strategic advantage.

Porter (1996) believes that competitive advantage is at the core of a firm success or failure, such advantage seeks lead to control the market and to larger-than-average profits.

This research paper provides information on how organizations apply strategic use of IS/It to achieve competitive advantage over its competitors. This paper pays particular attention to factors influencing the success or failure of organization attempts at gaining or enhancing competitive advantages, and how competitive advantages can be sustained.


IS is a set of interrelated elements that collect (input), manipulate (process), store, and disseminate (output) data and information and provide a reaction (feedback mechanism) to meet an objective (refer to Figure 1).

Figure 1.1: The Components of an Information System

IS is a combination of people’s activities and information technologies that supports organisation’s operation and decisions making and strategies for competitive advantage. IS plays a vital role in business operation and financial and non-financial aspect such as decision-making.

IS are classified either operations or management information systems. They are being grouped this way to identify the major roles each plays in the operations and managements of a business.

An Information System consists of five basic resources:
i) People Resources (end users and IS specialist)
ii) Software Resources (programs and procedures)
iii) Hardware Resources (machines and medias)
iv) Data Resources (data and knowledge bases)
v) Network Resources (communications media and network support)

SISs are systems used to supports or shape a business unit’s competitive strategy (Callon, 1996, and Nerumann, 1944). It is characterised by its ability significantly revamp the way in which a business is conducted in order to provide the firm strategic advantage. SIS is classified by its ability to change the manner a business is conducted, in order to achieve strategic advantage for the firm (Turban et al, 2006). SISs play strategic roles helping firm to gain competitive advantage or reduces competitive disadvantage by changing goals, products or processes through information systems.

A competitive strategy is a broad-based formula for how a business...
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