(4) Growth
There are several ways in which an enterprise can grow:
? product growth, which may involve:
o ‘length’, i.e. new products of the same kind as existing ones (e.g. a PC supplier may add laptops and handhelds to its desktop lines);
o ‘depth’, i.e. variants to existing products (e.g. additional options which can be selected by customers when buying a desktop); and
o ‘width’, i.e. new products which complement existing ones (e.g. modems, printers and accessories).
? functional growth, by performing additional business functions. Often this is through ‘vertical integration’ along the industry value-chain, which may provide benefits from direct control over supply, distribution or service, such as cost reduction, quality assurance or reliability. Sometimes the new functions are support services, such as the gathering and delivery of industry statistics;
? geographic growth, by acquiring from additional locations, or selling into additional locations;
? lateral growth, by applying excess capacity, by-products or expertise, in order to address new marketplaces.
Growth of any kind tends to be associated with the economies of scale or scope mentioned earlier.
(5) Alliance
By an alliance, Wiseman means a combination of two or more groups or individuals, whether intra- or supra- to the enterprise, which works together to achieve a common objective. Four types of alliance are identified:
? product integration;
? product development;
? product extension; and
? product distribution.
Other important contributions have been made to the process whereby strategic systems are, can be and/or should be uncovered (Wiseman & MacMillan 1984, Rackoff et al 1985, Earl 1986, EDP Analyzer 1986a, 1986b, Vitale et al 1986, Somogyi & Galliers 1987, Madrick 1987, Henderson et al 1987, Lederer & Mendelow 1988, Lederer & Sethi 1988, Laudon & Turner 1989, Main & Short 1989, Clemons & Weber 1990, Clemons 1991, Reich & Huff 1991, Dennis et al 1991, Lederer & Gardiner 1992a, Yetton & Johnston 1993).
Directions of Development
One of the findings by Scott Morton’s `Management in the 1990s’ Program’ was that IT is a critical enabler of the re-creation (redefinition) of the organisation. The recognition and exploitation of IT capabilities is fundamental to strategic choices of business scope, governance mechanisms, organisational reconfiguration, and competitive actions in the marketplace.
Approached from a different perspective, IT can be used to create an opportunity for change in organisations, whether or not the technology is actually central to the delivery of the benefits sought. The business process redesign and business process re-engineering (BPR) movements became highly influential during the early 1990s (Hammer 1990, Hammer & Champy 1993). The point was reached where it was difficult to submit papers to conferences, even those of an academic nature, without including the phrase in the title or abstract.
BPR is a further development of the enterprise value-chain notion. What it essentially does is to re-assert that organisational process is more important than organisational structure, and that organisational structure (form) must be determined by what it is that the enterprise does (function). IT is an enabler for BPR, because information systems support data flows, and are hence intrinsically oriented toward function rather than form, and because IT requires re-conception and re-development periodically, and such re-developments cause considerable upheaval and can therefore be used as a catalyst or opportunity for greater change than mere re-automation of existing arrangements.
Other recent theme of relevance to SIS is assessment of IT’s contribution to financial performance (e.g. Floyd & Woodridge 1990).
In addition to these well-established lines of analysis, there is a number of areas in which maturation is incomplete. The comments in the remainder of this section are therefore particularly judgmental and tentative.
A first concern is the prevalance of the use of the terms ‘comparative advantage’ and ‘competitive advantage’ as though they were equivalent and interchangeable. The notion of ‘comparative advantage’ was developed many years ago, as one of Ricardo’s contributions to ‘classical’ economics. It refers to the notion of market forces allocating resources to nations where they would be relatively most productive, and is therefore applicable at high levels of aggregation, e.g. national and regional economies.
The idea of ‘competitive’ advantage differs from comparative advantage in the scale at which it operates. Rather than relating to a broad geo-political area, competitive advantage accrues to individual corporations, provided that they are operating in relatively free-market environments. Although the notion of competitive advantage also originated in micro-economics, it has been much used in marketing and management strategy. The terms are becoming somewhat confused, in that, where enterprises which have competitive advantage are clustered within a country, that country may be said to derive a competitive advantage (Porter 1989, Adcock et al 1993, Soh et al 1993).
Another matter that creates difficulties has been the marked tendency to discuss competitive strategy predominantly in terms of leadership, or ‘first-mover’ status. The sufficiency of this approach is overdue for careful examination. It is entirely tenable for an organisation to intentionally defer aggressive moves, and instead consciously seek ’second-mover’ or ‘late-adopter’ status. Circumstances in which senior executives may judge this to be the appropriate strategy include where:
? no significant strategic advantage will arise, e.g. because:
o the technology is not sufficiently mature; or
o the area is not conducive to the available technology;
? second-mover advantages will exist; or
? the organisation’s resources and/or focus are committed to other projects or programs, and could not be diverted, or could not be diverted with sufficient advantage.
A particularly surprising weakness of the existing literature is its inapplicability to organisations which are not subject to powerful market-based competitive forces, such as not-for-profit enterprises, public sector agencies, and associations which are intentionally monopolistic, including industry and professional associations. This is so marked that some definitions of the term ’strategic IS’ are restricted to systems that “confer a unique, sustainable, or otherwise significant advantage” (Ciborra 1991).
For organisations of this kind, it is important that strategic information systems theory be re-conceptualised to stress ’strategy’ rather than ‘competition’, and show strategy in a competitive environment as a special (if very important) case. Customers of not-for-profits, of the public sector and of associations have an interest in their efficiency and effectiveness. Incentives need to be expressed not in terms of revenue, market share and growth, but rather in terms of perceived performance against objectives, and benefits delivered to stakeholders. There are also many circumstances in which such organisations are actors in industry value-chains, or have the potential to have significant negative impact on corporations’ cost-profiles, or speed of supply. Cooperation and even outright collaboration are important in such areas as defence and aerospace purchasing, international trade, taxation, statistical and corporate registration returns (Clarke 1994a, 1994b).
It is contended that, even in corporations operating in free-market economies, organisational strategy should not be analysed exclusively in competitive terms. Other possible bases include:
? short-term survival (which is essentially concerned with being around long enough to be able to compete at all);
? medium-term survival (which is concerned with the establishment or re-establishment of a platform or infrastructure on which recovery from current difficulties can be based);
? service (”our clients need it”);
? the marketing imperative (”our customers want it”);
? the regulatory imperative (”if we don’t do it, we’ll be precluded from participating by some powerful legal or political authority”);
? corporate infrastructure (which is concerned with investing in an environment which will support future adaptability, and the conception and implementation of as yet unspecified – and probably unspecifiable – future strategic advantage); and
? the national strategic imperative (”the government has determined that it is essential to the nation’s competitiveness”). This is apparent as an important factor in such countries as Japan and Singapore, and is the subject of Porter (1989).
This last category (national competitive advantage) highlights the need for recognition of collaboration or cooperation at a level higher than a competitively-motivated alliance (Malone & Yeats 1987, Benjamin et al 1990, Swatman & Clarke 1990, Clarke 1991). Two important classes which can be readily identified are:
? industry sectors which are non-competitive, or in which competition through IT does not exist or is not feasible. This may be due to the existence of a ‘natural monopoly’, statutory constraints, or a company which has ’seen off’ its competitors. Examples exist in such sectors as education, health, research and social welfare;
? industry sectors in which competition does take place, but in which competition is suspended in relation to the IT infrastructure. A variety of possible motivations exist for such suspension:
o to maintain prices at a higher level than they would otherwise be, or for other purposes outlawed in some countries by anti-trust, anti-monopoly and unfair trade practices legislation;
o to provide a higher level of service to the sector’s clients (as occurs in the inter-operability of ATM and EFT/POS equipment);
o to share large establishment costs;
o to achieve something which could not otherwise be achieved; and/or
o to satisfy the instructions or urgings of an influential player or coalition, often a government, but in some cases a trade or other association.
The question of collaboration leads to the need to define what comprises public infrastructure, industry infrastructure and private investment, and the extent to which the responsibility for investment is public, private or dual. This issue poses particularly significant difficulties for nations whose traditions and ideology are in conflict with the very notions of collaboration and of publicly-funded infrastructural investment.
Some inferences from Scott Morton (1991) in relation to IT infrastructure are summarised in Exhibit 14.
Exhibit 14: Scott Morton on Attitudes to IT Infrastructure
(Scott Morton 1991)
Characteristic Emerging View
Focus IT platform NOT Isolated systems
Investment vision Business NOT Technological
transformation sophistication
Investment Business criteria NOT Cost-benefit
criteria criteria alone
Scope of impact Business domain NOT IT or IS domains
Executive Strategic (line) NOT IT manager
responsibility manager
Guiding principle Strategic – IT NOT IT for
alignment implementation
A further common feature of most papers to date is the implicit assumption that business needs drive IT and information strategy. There is evidence, however, that, in some organisations, IT strategic planning is driving corporate planning, and that IT can actively assist in the creation of business opportunities, rather than just support them (Oesterle 1991).
Finally, the literature to date generally adopts the attitude that executives do, can or should uncover systems by at least semi-plannable processes. It is apparent that an alternative view may be beginning to emerge. Although it is too early to do more than speculate upon its final shape, it is possible to draw attention to some key works. This section draws heavily on the work of Claudio Ciborra of the Theseus Institute and the University of Bologna, and especially on Ciborra (1991).
In tracing the emergence of the alternative view, Ciborra draws on the economic concepts of Chamberlin (1933), who defined ‘monopolistic competition’ as heterogeneous corporations “cultivating unique strengths and capabilities, and defending them against imitations by other firms”; and of Schumpeter (1950), who saw competition “as a process linked to innovation in product, market or technology”. He then notes the compatibility of these ideas with Mintzberg’s (1990) arguments about organisational culture, which question the ability of managers to discover advantage, but rather see advantage emerging from organisational processes.
Innovation “is more the outcome of the capitalist process of creative destruction than the result of a strategic planning process” (Barney 1985). Ability at guessing, learning, and sheer luck appear in such a perspective to be key competitive factors.
Ciborra enlarges on these beginnings, by arguing that innovation with strategic potential can be encouraged in two ways. One is to “rely on local information and routine behaviour, … allowing and even encouraging tinkering [bricolage] by people close to the operational level”. The other is to use ‘radical learning’ to “intentionally challenge and smash established routines” and “forge new competencies”.
In many ways, this argument appears revolutionary, but in other ways it does not. Some of the themes are detectable in the IS and adjacent management literature, particularly in those areas deriving from the Japanese tradition (Nonaka and Yamanouchi 1989), but also in such papers as McGinnis (1984), Henderson & Treacy (1986), Copeland & McKenney (1988) and Earl (1988), and in the notions of ‘organisational transformation’, IT-induced business re-configuration (Scott Morton 1991), business process re-design (Davenport & Short 1990), and ‘renovating the corporation’ (Brown 1991).
Research in Strategic Information Systems
It is increasingly clear that separating out the effects of IT on such abstract and complex variables as corporate processes and corporate performance, is fraught with difficulties. Conventional empirical research methods (in the sense of the collection of large amounts of data about large populations, followed by statistical analysis in order to test specific hypotheses) is not easy to apply to the topic of strategic information systems. Strategic studies are essentially about the long term, and hence longitudinal studies are highly desirable. Moreover, because of the extent to which multiple perspectives and interpretations are involved, triangulation is important, and data may in many cases have to be drawn from less formal sources not commonly used in formal research. Other problems arise because many of the organisations of interest to researchers are not only large and complex, but also comprise multiple business units. Care must therefore be taken that the appropriate level of aggregation is selected.
With the gradual maturation of the topic of strategic information systems, increased attention is being paid to research methods, and several important papers now take a more carefully considered approach than was possible during the early, anecdote-based phase (Bakos & Treacy 1986, Sager 1988, Sethi 1988, Venkatraman 1989, Clemons & Weber 1990a, Reich & Benbasat 1990, Broadbent & Weill 1991, Chan & Huff 1992, Ang?le et al 1993). It is to be expected that further developments and refinements in research methods will emerge during the next few years.
Conclusions
Strategic information systems is a topic which is very important, and highly dynamic. This paper has presented an interpretation of the emergence and development of theory in the area, and of current and emerging themes. Particularly significant tensions exist between the relevance of research outcomes and the rigour of research processes, and the literature must be used with an especially critical eye.
Organisations seek to gain significant advantages by employing SIS to alter the internal structure or the entire industry structure. Several frameworks exist which are intended to assist understanding of the use of SIS based on the industry organisation, value chain, and strategic thrusts. Organisations seek competitive advantages over other rivals along the whole industry value chain. Generic strategies have been proposed.
Despite the usefulness of these frameworks applied to the search for competitive advantages, these frameworks are market-oriented, and are not suitable to explain SIS developed in other non-market-oriented industries, such as government. Another deficiency of these frameworks is the concentration on competitive advantage to the exclusion of other perspectives. As a result of industry-wide adoption of SIS, the questions of sustainability of competitive advantage and of competitive necessity arise. This in turn leads to cooperative arrangements, including alliances, and at a more abstract level, collaboration.
IT has become a significant factor in the operation and planning of information-based enterprises. Strategic information systems theory has done much to enable the description, explanation and prediction of behaviour. There remain significant weaknesses which need to be addressed.