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STRATEGIC ISSUES OF INFORMATION TECHNOLOGY Benefits of Developing a Technology Strategy

o Alignment with business objectives –ensures that the
Information Technology and Corporate Strategy business needs are fulfilled by directly linking objectives of the
technology strategy to business needs.
What is Technology Strategy? o Development of long-term vision – ensures a long-term vision,
o An overall plan which consists of principles, objectives, and focused on the future that looks into the horizon to try to
tactics for using technology to achieve organizational predict what the organization's business need will be based
objectives. on the market and competition.
o May define specific technologies, identify which staff o Increased operational efficiency – When technology is aligned
members have responsibility for managing these with business needs and implemented at the right time, there
technologies, and how these technologies will align with are direct efficiencies that are gained. These efficiencies can
business objectives. be in the form of increased employee output, improved
o The goal of the strategy is to outline and specify how customer communication, and enhanced team collaboration.
technology should support overall corporate strategy All of which make an organization more agile.
spanning three to five years into the future. o Competitive advantage – technology has resulted in the
o Technology strategy impacts budget allocation, operational emergence of new business models and changed customer
procedures, responsibilities in relation to business objectives, experiences. For organizations to compete in today's world
and day-to-day functions. they must operate at the speed of business or risk becoming
obsolete.
Selecting the Right Technology Strategy
o Recognize the emergence of new technology The Value Chain
o Technology adoption and implementation timing
o Utilize existing ecosystems or emerging ecosystems

Implementing a Technology Strategy

o Step 1: Develop a team. – The team must consist of
individuals from various functions across the organization who
are passionate about technology and will serve as advocates
to the rest of the organization.
o Step 2: Thoroughly define the organization's business
objectives in order to align the technology strategy.
o Step 3: - Prioritize technology initiatives strategically. It is
important to make strategic choices in the allocation of
resources to achieve planned end results and organizational
Figure 1. The value chain.
objectives. Source: Information Technology for Management, 2013, p. 107
o Step 4: Sell the new technology strategy to the organization.
This step requires a comprehensive plan as to how the o Michael Porter at Harvard has popularized the concept of the
strategy is going to be shared with leaders, executives, and "value chain", the activities in an organization that add value
staff including engagement, communication, and messaging.

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to its products or services (Porter and Millan, as cited in Capitalizing on Information Technology
Lucas, 2013). o There are four steps to take advantage of information
o Figure 1 shows primary activities in the value chain which technology to be followed by top management.
include inbound logistics, operations outbound logistics, 1. Look for ways to incorporate technology in a product or
marketing and sales, and service. Each of these activities service. Does information processing provide an
adds value directly to the firm's output. opportunity for a new approach to business? Does the
o Supporting these primary activities are firm's infrastructure, technology make it possible to differentiate a product or
human resource management, technology development, and service from that of the competition?
procurement. 2. Seek ways to use technology to connect with other firms.
There is a great interest in interorganizational systems
Some Generic Strategies that link two organizations together.
o Porter elaborates on his value chain analysis and suggests 3. Look for ways to use technology to make dramatic
that firms follow one of three generic strategies. changes in the way to structure the organization. Use
1. Low-cost producer - The firm tries to have the lowest information technology organization design variables so
costs in the industry so that it can compete on price. management can structure an organization that is highly
2. Differentiation - The firms tries to separate its product competitive, that uses its technologically enabled
image from that of the competition in such a way that the structure to become a formidable competitor.
customer wants its product. 4. Integrate technology with planning. To integrate
3. Market niche strategy – A number of firms try to find a technology with planning, managers have to understand
market niche and exploit. A niche is some part of a market (1) the operation of their business; (2) the capabilities of
that is not being served by others. technology; (3) the firm has to have invested in building a
modern technological infrastructure so that it is ready to
More Specific Strategies take advantage of new opportunities; and (4)
o Most of the time, the firm adopts only one of these, but it is management has to make information technology a part
possible to follow two at the same time. of its planning process.
- Customer driven – The firm focuses on how they can
provide better customer service. Creating and Sustaining Competitive Edge
- Reducing cycle times – A firm has a variety of cycle times;
a typical one is the length of time it takes to design a new Using Resources to Advantage
product or service. o A resource must be valuable enough that a competitor will
- Global competition – Some firms have decided to follow a think twice before trying to acquire or create a copy.
strategy of competing in the global marketplace rather o A strategic resource has to be "imperfectly inimitable" as well
that only in the local market. A firm with global presence as to deter creating a direct imitation.
will need a variety of technologies to help coordinate and o A resource has to be non-substitutable so that a competitor
control all its activities. cannot find an easy substitute in the form of a different, more
- Right-Sizing – Usually to right-size meant a serious accessible resource that is easy to acquire.
reduction in the number of workers in the firm, and rather
large write-offs for restructuring. Protecting an IT Innovation
- Quality – Many firms around the world are focusing on the o The term "regimes of appropriability" is used to describe how
quality in the hope of getting ahead of the competition. easy it is to protect an innovation.

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o There are ways to use technology to strengthen regime of o The manager should be aware of the opportunities provided
appropriability. by the technology and the constraints that already exists for
1. To be the first mover. The first mover may be able to the firm in developing new technologies.
create an overwhelming lead over the competition. o The manager should also recognize that as decisions are
2. Overwhelm the competition with technological leadership. made, alternatives chosen will have an impact in technology
3. Continuous innovation. and its development within the firm.
4. Create a high switching cost. By making it very expensive
or inconvenient to switch a customer's business to a Managing Information Technology
competitor, it is assured that the customer will continue to
do business or patronize the products or services.

Integrating Technology with the Business Environment

Figure 3. A framework for managing information technology

Source: Information Technology for Management, 2013, p. 119

o Figure 3 shows a framework for managing information

technology. The arrows in the figure show the relationship
between actions in the boxes for managing and controlling
technology.

A Vision of the Organization and Technology

Figure 2. The management challenge of integrating information o A fundamental responsibility for management is to develop a
technology. vision for the business and for the role of information
Source: Information Technology for Management, 2013, p. 117
technology in achieving that vision.
o The vision should describe the mission of the organization
o Figure 2 describes how a manager can integrate technology
and identify the products and services it produces.
with decision making.
o It should identify the markets in which the firm will compete
o Successful managers must be able to integrate their
and its strategy for competition.
knowledge of information technology and their business
knowledge in making decisions.

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o Information technology is likely to play an important part in o The corporate strategic plan should identify broad areas in
shaping the structure of the organization and in supporting its which technology can contribute to the firm.
value chain activities. o An IT plan adds further details and identifies specific
applications of the technology for development.
o The management must undertake a system that is both
Technology for Structuring the Organization feasible and desirable.
o Strategy and structure must be considered together. o The management must consider the existing portfolio of
o Beyond the adoption for a generic strategy such as becoming applications and guidance on the amount of investment
the low-cost producer, management wants to develop possible and the balance of the portfolio.
technology that will give the firm a competitive edge. o Top management and managers must demonstrate that they
o New ideas for strategic advantage can be developed by are behind the development of new system and see that there
reviewing what competitors are doing, staying abreast of the is adequate user input in the design process.
technology, and looking for analogies in other industries.
The IT Infrastructure
Integrating Technology and Decision Making o Some experts define the infrastructure as limited to common
o A significant responsibility of management is to integrate facilities the firm provides, like a network; this view of
technology with all business decisions. infrastructure is similar to that of society at large which
o Integration means that the manager is aware of how new government provides infrastructure such as roads and
technology can create opportunities. airports.
o Concurrently, the manager has to be aware of the impact of o Broader view of infrastructure defines as the firm's existing
decisions on the firm's technology. stock of technology that is available to users.
o Infrastructure is extremely important because it facilitates the
A Corporate Plan for Strategy development of new IT initiatives.
o A corporate strategic plan comes from the firm's vision for its
future activities. Ongoing Management of IT
o Information Technology should be an integral part of the firm's o This work consists of two different kinds of tasks: developing
strategic plan. It is possible for managers in the IT function to new applications and operating the existing stock of
develop a more detailed IT plan to support the corporation. applications.

Alliances and Partnership

o Companies today form a variety of partnerships and alliances
in the information technology industry.
o In fact, firms sometimes form alliances in one area with a REFERENCES:
company they compete with in some other aspect of business.
o Information technology facilitates these kinds of cooperative
arrangements by providing electronic linking and Lucas, H. (2013). Information Technology for Management.
communications. Switzerland: Creative Commons Attributions.

OSIbeyond (2019). Technology Strategy 101. Retrieved from:

New IT Initiatives
https://www.osibeyond.com/resources/technology-strategy-101/.

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