When we talk about contemporary Information Systems, we no longer mean to discuss traditional IT strategies and there is a reason to it. Traditional IT applications have commonly focused on internal efficiencies and have therefore been evaluated using traditional ROI criteria. Traditional IS applications tends to focus more towards the revenue side of the business, where quantification is often more challenging. According to a survey only 20 percent of the applications studied have gone through traditional project review and screening processes. Strategic IS are either waiting for immediate approvals at higher levels and that even with minimal justification or to be buried in other parts of the budget.
Example in project management where emphasis is given on the ability to build prototypes by using fourth generation software, packages permits ‘market settings’ before substantial assessments and taxes have been invested, thus allowing a multi-step justification process. For example, Hewlett-Packard pilot tested their ‘Sales Productivity System’ by giving portable computers to 5 percent of their field sales personnel.
The portables were loaded with various productivity tools, most of which were off-the-shelf software products adapted for HP application. By designing the test carefully, HP executives inexpensively demonstrated the productivity improvements possible through the use of portable computers. This way HP by using portable computers and test data, equipped its entire sales force with latest IS strategies in the form of portables which gained the sales force productivity, as a result HP received an interesting and unexpected benefit.
Customers aware of, and curious about, the HP pilot tests were anxious to learn of the results and some subsequently purchased the Sales Productivity System for their own sales force (Earl, 1998, p. 112). Packaged software and prototyping tools require relatively low fixed initial costs, making it possible to ‘market test’ a system before incurring the large variable costs associated with multiple sites or users.
Research conducted on IS developments in the financial services sector highlighted how the management of IT in organizations is fraught with difficulties, tensions, and contradictions. Drawing upon and developing that thesis, a central argument appears and provokes those strategies that minimize the tensions surrounding IT management by systematically relating to complex sets of power, managerial, and market relations.
The challenges cannot simply be reduced to their technical or administrative dimensions nor managed by purely technical or communication solutions, as much of the traditional literature suggests. It is not just a matter of awaiting further advancement of technical knowledge or the improvement in communications whereupon systems problems will, at a stroke, disappear (Bloomfield et al, 2000, p. 37).
This tendency to reduce problems to a technical-administrative dimension is illustrated in the rise of an ‘IT-strategy’ discourse and the identification of a ‘communication problem’ in systems development. First, with respect to strategy, the potential of IT applications in a multiplicity of spheres must be viewed as a factor in gaining competitive advantage in rapidly changing markets. In this case there is a need to analyse the changing consumer trends and emphasis should be given to external processes of understanding consumers’ needs in context with suppliers and competition.
There is a need to compensate the executive anxieties behind the high costs of IT investment as consultants have increasingly been imposing a concept of ‘IT strategy’ on their clients in the belief that coherent and long-term planning of IT investments is the only way to secure adequate returns on such capital expenditure.
If we analyze strategic IS in the light of those been relentless pressures that IT managers have gone through, we would feel that such pressures on IT departments and businesses have been generally aimed to cut costs and account for money spent, yet few organisations appear to be satisfied with their evaluation procedures. Very few IS in context with management and organizational policies evaluate IT investment consistently, either within IT or as between IT and other investments (Currie & Galliers, 1999, p. 205).
Here what differ the contemporary IS debate from the traditional one is the ‘value for money’ concern that has been a major issue for a number of years. Similarly ROI surrounds the themes that are the variety of evaluation methods available, how to select the best method to use in a given situation, the impact of evaluation on the IT decision-making process, and the increasingly important factor of project dynamics.
ROI is dependant upon what we call ‘Evaluation’ which in context with the IS projects refers to the ‘Hard benefits’ that are the quantifiable positive outcomes, typically cash savings from staff reduction. These are the measurable and quantifiable costs of the system’s hardware, however contemporary IS concerns about and include many measurable but overlooked costs such as training, restructuring, and the acquisition of employees, often with new skills.
Similarly ‘Soft benefits’ are inclusive of all job enrichment but it also includes those elements that are proved to be somehow the rationale of a strategic IS competitive advantage, this includes improved customer service, value for money and so on. In strategic IS risks are all about uncertain environment, whether internal or external, software project incorporates a particular uncertainty over the level of costs and benefits streams, or their time horizon.
Therefore in order to establish ROI, the organisation must evaluate a project at any of several stages in its development and implementation. This evaluation depends upon the decision which is taken to outsource the IT program or software. Outsourcing of strategic IT related parts of the core business is so prevalent and its impact on investments and projects uphold so significance that this stage must be seen as a pre-strategy stage of evaluation.
IS strategy when developed at this stage must be in accordance with the support alongside the business strategy and the role of IT must be assessed in general terms before either strategy can be finalised. A project that has been defined could be of any type, it could be an IT application, software program or even a simple decision that tells how to install IT infrastructure. While still in the developmental phase, it needs to be cost justified in the context of other capital investments.
IS Strategies in the light of decision making
Before presenting IS strategies, it is useful to take a glimpse of the gap that exists between the transformation of a traditional business firm and the emerging digital firm. The traditional strategy is capable of presenting a centralized, hierarchical and structured arrangement of not the service but the procedures; a fixed set of standard oriented procedures to ensure delivery of the product. On the other hand, the digital or the contemporary strategy is less hierarchical and more decentralized with a lot of flexibility to deliver customized products in a unique manner (Kenneth & James, 2003, p. 6).
IS decision makers no doubt utilize all the approaches and appropriate resources that they require for their systems and software plus data warehousing and computer networking that business intelligence systems draw upon for decision support. They even take their decisions by using business intelligence systems which they believe that ‘closes the loop’ within the organization, making sure that the organization learns from experience.
But still business decisions are marked critical for they whether proactively or reactively help an organization adapt to change rapidly and also help decision makers assess quickly how changes are affecting their organizations, customers, and supply chains so that they can make intelligent decisions in the future (Thierauf, 2001, p. 91). Any business advantage to IS is not limited to the data warehouse or the real-time computing system but in the seamless and organized delivery of business intelligence to decision makers.
The contemporary IS enterprises need an infrastructure to capture and create business intelligence (BI), store it, improve and enhance it, organize it, make it consistent and usable, and disseminate it to decision makers in the organization who need it. Strategic IS are not just a set of tools but a set of processes, technologies, attitudes, and reward systems which serve as an integrated approach to identifying, collecting, managing, and, most importantly, sharing the enterprise information assets with individual employees to put the business intelligence to use.
Decision makers while taking full advantage of the information and knowledge that underlies business intelligence and use it to move the organization into the next phase needed for effective marketing and customer management services and support. Decision makers today are fully equipped with the awareness of the customers’ needs and therefore they effectively satisfy customers by adding value to their service.
Since computer managers are being asked continually to manage more and more of the information technology they must develop the ability to reach beyond the mainframe data centre into an end-user domain filled with a diversity of microcomputers, departmental systems, and networks as well as a mixture of software tools and applications to which they should be prepared to make the elements of this mixture work together.
No longer are traditional approaches followed when computer managers used to think in terms of a single vendor or hardware or a single operating system. At this stage where an IS manager clearly find ways to integrate an expanding assortment of computing products and services to meet the demands of enterprise-wide and even enterprise information, knowledge, and intelligence in a competitive environment that has expanded to a global scale, he uses open systems environment.
Open systems architecture provides the IS management the facility to implement updated interfaces, services, and supporting formats, which enable application software to be accessed across systems, to interoperate with other applications, and to interact with users in a consistent manner (Thierauf, 2001, p. 93). Such approaches are used by retailers like Wal-Mart, Kmart, Dayton Hudson, and Sears, who manage inventory by linking to manufacturers as if in a single network.
The open systems approach on one hand eliminates the advantages of a supplier’s proprietary network, on the other it also gives manufacturers valuable information. For example, the new system enables retailers to provide manufacturers with updated sales and inventory information electronically so that the manufacturers can plan production. Since the systems are decentralized, upon realizing that data arriving in a standard format from so many customers, a manufacturer like Levi Strauss or Vanity Fair can easily estimate aggregate demand weeks in advance and produce sales forecasts to help them plan production even further in advance.
Such an approach helps a company who desires to take the analysis one step further using business intelligence technology. Similarly client/server architectures provide users transparent access to file servers, database servers, print servers, and other devices, thereby maximizing user options and network throughput, while minimizing operating costs and response time over the network.
Client/server architecture makes sense for improving reimbursement for information and knowledge because it helps organizations maximize their extensive investments in processing power from the desktop to the computer mainframe. However such an approach is useful when IS managers feel it appropriate for all organizational applications because there are a number of factors for the shift to client/ server computing.
The traditional development and implementation of strategic IS has centred on systems that have operated in isolation in the past. However, today it is through the modern or digital IS that the firms have been able to renew their focus on the customer and the pervasiveness of the Web; companies need to find ways to integrate such systems. Such an approach is found with enterprise application integration (EAI) because a comprehensive and unified operating mode is the ultimate goal of a business intelligence system and hardware and software products cannot be used in isolation.
It is not an easy task to build a corporate-wide EAI infrastructure that requires the integration of many different methods and technologies. Companies who want to establish a ROI need to unlock the collective expertise for companywide successful usage and even then it is necessary not only to implement integrated hardware and software technology but also to integrate a company’s personnel and their related business processes with appropriate business intelligence technology.
New IS Approaches
Hiring project champions play a significant position in effective completion of the project. Recent research work also indicates that project champions uphold a significant role in the design and implementation of innovative uses of IT helpful in the ROI. Project champions have been found to be instrumental in many other forms of R&D innovation. Runge in his study of 35 customer linkage applications, found that in 29 percent there was an identifiable project champion, usually drawn from the user area, and having minimal background in IT whereas Lockett, drawing from a study of twenty-nine applications selected from a single firm, found that most of the successful applications were nurtured by a champion (Earl, 1998, p. 113).
Projects that failed were usually without a champion, and projects whose champion had moved on to another job were at great risk. In some cases the champion was positioned high enough in the organization so as to be able to move the necessary organizational mountains. In other cases the champion was supported by a more senior project sponsor. ROI can be set up by identifying and assisting project champions to work along with IS managers to employ to foster innovation.
Prototyping, the rapid building of part of a proposed system that users can test, can lower development costs and decrease development time. At another level prototyping can also be seen as an effective tool for communication between users and developers. Such communication is always carried out with an abstraction tool of some sort, for example, a system chart or a set of written specifications.
A prototype system is also an abstraction or a story board but has the dual advantages of being more easily understood by the user and more easily changed by the developer. Thus prototyping, appropriately applied, is an effective technique for refining specifications by promoting mutual learning on the part of users and information systems staff. At some point this mutual learning can bring the ‘user’ and the ‘developer’ so close that these terms distinguish prior roles rather than current activities.
Today IS managers in context with strategic IS are aimed not only at cost reduction techniques but at adding value to their software and custom software packages, so that cost would be controlled by default. IS managers are well aware of the loopholes that are reflected in traditional IS therefore user-built software tends to lack many of the features promoted by professional training and experience with the technology.
Some of the common problems they face include irrelevant or unstructured user-written code, full of bugs, the software may make inefficient use of the hardware and will almost certainly be without documentation and adequate provisions for backup or other security mechanisms. It often happens that only the IS manager’s sense of propriety is at risk and the system is then used in a specific, perhaps one-time, situation and then discarded. Or software champions are unsure about the decisions of the IS managers regarding the project.
Whatever be the circumstances, project champions require a system that is intended for ongoing use and should be improved with the features common to professionally developed software. The key is recognizing which systems will be used often enough to justify further attention, then convincing users to participate in an improvement process that may bring few immediately obvious benefits. Since users typically feel pleased and proud about software they have designed, some sort of incentive based control is appropriate.
IS literature reveals to us what IS scientists like Earl and Hopwood think about the effective projects on the theoretical platform of strategic decision making. According to IS evaluation, software projects are complex and pervasive socio-technical tools whose life extends over several months or even years then investment in IS can be understood as a programme of social action, based on a complex technology and taking place over a substantial period in time (Currie & Galliers, 1999, p. 214).
Such investments on IT projects refer to the ways that pave like the programmes of social action which are the subject of evaluation research. However the success of the problems generally depends upon how well structured are the evaluators. In case the structure lacks clear objectives and knowledge, the potential impact of the system cause and affects the whole project.
Bloomfield P. Brian, Coombs Rod, Knights David & Litter Dale, (2000) Information Technology and Organizations: Strategies, Networks, and Integration: Oxford University Press: Oxford.
Currie Wendy & Galliers Bob, (1999) Rethinking Management Information Systems: An Interdisciplinary Perspective: Oxford University Press: Oxford.
Earl J. Michael, (1998) Information Management: The Organizational Dimension: Oxford University Press: Oxford.
Kenneth C. Laudon & James P. Laudon, (2003) Management Information Systems, 8th edition.
Thierauf J. Robert, (2001) Effective Business Intelligence Systems: Quorum Books: Westport, CT.