Lukas saidim
SCT222-0137/2020
Discuss the concept of strategic information systems
Strategic Information Systems are computer systems that are used at every level of
the organization that change operational objectives, service products and
environmental relationships to help organizations gain competitive advantage.
This concept has evolved significantly with the rapid advancement of technology and
the increasing importance of data-driven decision-making. Strategic information
system provides a connection between demands of organization and latest
information technology. This tactic helps an organization to get hold of the market
by utilizing Information tech to meet its challenging requirements to the continuous
variation in the corporate environment.
SIS can encompass a wide range of IT applications, including software systems,
databases, hardware infrastructure, and communication networks, all strategically
aligned with an organization's business objectives.
Types of Information System strategic:
1. Operation support system
The primary purpose of this system is to keep a check on transactions, operations,
control, chain supply, and management. It also helps to facilitate internal and
external talks, and it updates the central main database of the organization.
2. Management Support System
These systems facilitate and provide precise information and data to the manager
for easy routines, decision-making processes. Decision support system which helps
to solve particular issues related problems.
The core principles of SIS are to leverage IT resources to create value, improve
operational efficiency, and enable innovation. Below are the key elements that
define the concept of SIS:
1. Alignment with Business Strategy: The most fundamental characteristic of SIS is
its alignment with an organization's overall business strategy. This means that IT
investments and initiatives are not isolated but are designed to support and advance
the organization's strategic goals. For example, if a company aims to expand its
market share through improved customer service, its SIS may involve implementing
a customer relationship management (CRM) system to enhance customer
interactions.
2. Competitive Advantage: SIS is a potent tool for gaining a competitive advantage.
By effectively utilizing IT resources, organizations can differentiate themselves from
competitors. This could involve creating unique digital products or services,
streamlining operations to reduce costs, or improving the customer experience
through digital channels.
3. Data-Driven Decision-Making: SIS relies heavily on data and analytics. It enables
organizations to collect, process, and analyze large volumes of data to make
informed decisions. Data-driven insights can drive better strategic planning, product
development, marketing campaigns, and customer engagement strategies.
4. Innovation and Transformation: SIS is not just about optimizing existing processes
but also about fostering innovation and transformation. It allows organizations to
explore new business models, enter new markets, and adapt to changing industry
dynamics. Innovations like e-commerce platforms, mobile apps, and digital payment
systems are classic examples of SIS-driven transformations.
5. Risk Management: In an increasingly interconnected and digitized world,
managing IT-related risks is crucial. SIS includes strategies for cybersecurity, data
protection, and disaster recovery to safeguard an organization's digital assets and
reputation. Proactive risk management is a key component of a well-rounded SIS.
6. Flexibility and Adaptability: SIS should be flexible and adaptable to changing
circumstances. Rapid technological advancements and market shifts require
organizations to continually assess and update their IT strategies to remain
competitive. Cloud computing, for instance, offers scalability and agility, allowing
businesses to adapt to changing demands.
7. Interconnectedness: Modern organizations are often global and operate in
complex ecosystems. SIS recognizes the importance of interconnectedness, both
internally within an organization's departments and externally with partners,
suppliers, and customers. Integration of systems and data sharing are vital to
streamline operations and enhance collaboration.
8. Performance Measurement: SIS requires a system of performance measurement
and evaluation. Key performance indicators (KPIs) are established to assess the
effectiveness of IT investments and initiatives. Regular evaluation helps in fine-tuning
strategies and ensuring that IT resources are used efficiently.
9. Resource Allocation: Effective resource allocation is critical in SIS. Organizations
must allocate budgets, human resources, and technology investments wisely to
achieve their strategic objectives. This involves balancing short-term needs with
long-term strategic goals.
10. Ethical and Regulatory Considerations: SIS also entails ethical and regulatory
considerations, particularly concerning data privacy and compliance with industry-
specific regulations. Organizations must ensure that their IT practices align with legal
and ethical standards to avoid legal and reputational risks.
In practice, implementing SIS involves a strategic planning process that integrates IT
into the organization's overall strategic planning. This process typically includes the
following steps:
1. Assessment and Analysis: Organizations assess their current IT capabilities,
identify strengths and weaknesses, and analyze the competitive landscape. This
phase involves conducting a SWOT analysis (Strengths, Weaknesses, Opportunities,
Threats) related to IT.
2. Setting Objectives: Clear and specific objectives are defined, aligning IT goals with
broader business objectives. These objectives should be SMART (Specific,
Measurable, Achievable, Relevant, Time-bound).
3. Resource Allocation: Organizations allocate resources, including budgets and
personnel, to support the achievement of IT-related objectives.
4. Implementation: IT initiatives are implemented based on the strategic plan. This
may involve developing and deploying new systems, upgrading existing ones, or
adopting emerging technologies.
Monitoring and Evaluation: Key performance indicators are established to track
progress. Regular monitoring and evaluation help in identifying areas that need
adjustments or improvements.
5. Adaptation and Innovation: SIS is an ongoing process that requires organizations
to adapt to changing circumstances and seize opportunities for innovation.
Continuous improvement and innovation are integral to maintaining a competitive
edge.
6. Risk Management: Effective risk management strategies are implemented to
mitigate IT-related risks, including cybersecurity threats and compliance issues.
Uses of Strategic information system
1. Cost Leadership Strategy
Information systems are said to support this strategy if the company able to reach a
position lowest costs in the industry, by way of business process engineering,
lowering costs from suppliers, and reduce costs to customers. For the example most
of retail company who create promotion of the retail product to attract customers to
buy the product cheaper than the other companies.
2. Differentiation Strategy - Information systems are said to support this strategy if
they can provide products or services unique and able to provide more value to
customers compared to other competitors, namely by way of: utilizing information
technology to create products or services that are different, and reduce the
advantages of differentiation from competitors.
3. Focus Strategy - Information systems are said to support this strategy if they can
help the company focusing on specific products or services within the organization.
4. Innovation Strategy - Information systems are said to support this strategy if they
can find specific ways in doing business is by providing products or services with the
latest innovations. For the example Apple Product that offers a lot of features and
high qualities software in their smartphone, smartwatch, or laptop. Even the price is
more expensive than similar products, but the people are willing to buy because of
the high quality and the innovation.
5. Alliance Strategy - Information systems are said to support this strategy if they
can create cooperative relationships which benefits both suppliers and other
companies even with competitors.
6. Growth Strategy - Information systems are said to support this strategy if they
able to develop and diversify market.
7. Quality Strategy - Information systems are said to support this strategy if they
able to help improve the quality of the product or service.
