Business Strategy & Information Systems

Business Strategy & Information Systems

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Businesses are currently experiencing more volatile marketplaces, global competition, shortened product life cycles, customer pressures for tailored offerings and tighter performance standards, they increasingly depend on new information systems to gain or maintain competitive advantage. The IS components in business solutions must be constructed rapidly and effectively despite the massive changes in information systems product capability, a restructured supply industry, potential shifts in system development approaches, and new ambiguities in terms of what should be regarded as a business-side versus a technical specialist task. It is essential that a corporation’s ability to change and be flexible is dynamic in the current economic environment. The underlying idea is that in the context of ever increasing competitive environments, corporations require higher levels of strategic flexibility. This in turn demands more flexible organizations and processes, which in turn requires more flexible underlying IT infrastructures to accommodate this.

The need for flexibility in organizational arrangements and alliances is prompting a move away from tight integration toward loosely coupled arrangements. In IS terms this would correspond to a mainframe, a traditional ‘monolithic’, inflexible, stable and tightly coupled system to a technology such as Web Services, a proprietary, loosely coupled, hybrid and flexible system. Web services can be viewed as the adoption of loosely coupled technologies to implement loosely coupled strategic and organizational arrangements. It is important to recognize that the use of information systems alone does not derive business benefits; benefits flow from the use of information systems. Information systems enable people to do things differently and these actions produce the benefits. To realise this potential it is necessary to identify the role of the information system function (key practices) and identify how IS can be exploited for competitive advantage.

Alignment of information systems strategy with the business strategy is an important objective if organizations are to use information technology resources effectively. The alignment of business strategy and information systems in organizations is defined by Luftman as “applying Information Technology (IT) in an appropriate and timely way, in harmony with businesses strategies, goals, and needs”. This means that it is necessary for IS and the general direction of the IS departments goals to be consistent with the general business strategy. An example of strategic alignment is where business strategy would correspond to sell products globally, IS strategy would provide a global sales information system to facilitate the selling of goods globally.

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