By: Yudha Saintika

Faculty of Industry and Information Technology

Telkom Institute of Technology Purwokerto

Evolving Roles of IS/IT in Organization:

From Peripheral to Strategic Roles

Sept, 2018

Session Objectives

Understand the strategic context of IS/IT in organization

Understand the development of IS/IT strategy

Understand the impact of business strategy to IS/IT strategy development.

The challenge of IS/IT plan in Indonesia

Agenda

Strategic Context of IS/IT in Organization Evolution of IS in Organization Success Factors of Strategic Information

SystemsThe Relationship of IS/IT Strategy and

Business Strategy IS/IT StrategyCompetitive Strategy and Its Implication to

IS/IT Strategy SPIS in Indonesia: Local point of view

Evolution of Strategic Context of Information System

Silo Information System to An Integrated Information System

(Enterprise System).

Simple environment to complex environment.

Support Information System to Strategic Information

System.

Internal business focus to internal and external business

focus.

Enhance core business functions.

Service oriented instead of infrastructure oriented.

Etc.

Strategic Context of IS in Organization

More products available in digital form – Hence e-delivery through an IS (give some examples e-products?)

Software UangInformasi

Musik TV Digital eBook

….More..

Strategic Context of IS in Organization More commerce takes place electronically (e-commerce-create

new opportunities, online transaction)

Strategic Context of IS in Organization

More activities getting more complex, need various of data and information (data mining, enterprise information systems – ERP, Business Intelligent)

Sales Distribution Advertising

AccountingManufacturing

Research

ERP

Strategic Context of IS in Organization

Interrelatedness of Business activities within and between companies (improve efficiency and productivity)

Suppliers Purchasing Production Distribution Customers

Flow of Materials

Flow of Information

Strategic Context of IS in Organization

Technology advancement that can processes data in a

large volume in a relatively short time.

Conexica.com

The Evolution of Information SystemsEra Information System Data Processing

1960 Transaction Processing System Automate repeating activity

1970 Management Information

System

Recap weekly, monthly, etc.

functional data

1980 Strategic Information System Process External and Internal

data

1990 E-Business, E-Commerce Process Multi-stakeholder

Online Data

2000 Enterprise Resource Planning Integrate Functional Data

2006 Business Intelligent Process Temporal and Spatial

Data

Characteristic of Transaction Processing

System (Data Processing—DP) Era

Centralized processing

Using multi-purpose Mainframe computer

Batch processing

Data storage: magnetic disk, tape

Programming language: Cobol, Basic, etc.

Automating information-based processes

Characterize the nature of business at DP era?

Characteristics of MIS Era Introducing minicomputer Using variety business applications Still centralized Used a hierarchical application portfolio model based

on a stratification of management activity: Strategic planning Management control Operational control

Increase management effectiveness by satisfying their information requirements for decision making – to help manager.

Characterize the nature of business at MIS era?

Characteristics of SIS Era

Introducing Personal Computer (PC)

Introducing office automation

Introducing new capabilities: flexible access and

decision support

Improving competitiveness by changing the

nature or conduct of business (i.e. IS/IT

investments can be a source of competitive

advantage)

Characterize the nature of business at SIS era?

Sales forecasting operating plans

capacity planning, profit/earnings

forecasts, business mix analysis,

manpower planning, financial modeling

Sales analysis budgetary control, management

accounting, inventory management, quality

analysis, expense reporting, market research &

statistics, WIP control, requirements planning,

supplier analysis, etc.

Order entry, processing, tracking shipping documents,

vehicle scheduling/loading, invoicing, sales and purchase

ledgers, cost accounting, stock control, shop-floor

scheduling, bill of materials, purchase orders, receiving,

employee records, payroll, word processing

Planning

systems

examples

Control

systems

example

Operational

systems

examples

Early Views and Models of IS/IT in Organizations (Anthony, 65)

SIS

MIS

DP

ERP/BI

Types of SIS

Those that link the organization to its customers or suppliers to share information.

Those that effectively integrate the use of information in the organization value chain.

Those that enable the organization to develop new or enhanced products or services based on information.

Those that provide managers with better information for strategy development.

Example: Tradenet, SABRE (American Airlines), Valuelink (Baxter Healthcare).

Success Factors of SIS External in nature instead of internal focus: i.e image building

Adding value instead of cost reduction: i.e e-ticket

Sharing the benefits internally and externally: i.e ATM

Understanding customers and their needs: i.e customized product

Business instead of technology driven innovation: i.e covering a wider customers

Incremental instead of total development: i.e web-based application

Using information gained to develop business: i.e learning organization

Exercise your critical thinking by giving more examples to those success factors !!

Trends in the evolution of business IS/IT (source: adapted

from R.D. Galliers and E. Somogyi)

Different views of strategic information systems

Strategic IS gives impact to internal and external of the organization!!!

The Relationship Between the Business, SIS,

MIS, and DP

Business Strategic

Management

IS/IT Strategic

Management (SIS)

IS Management

(MIS)

Project and Computer

Management (DP)

Executive Management

User Management

User Operations

Impact Analysis

Information Analysis

Systems Design

The relationship between business, IS and IT strategies

Scope SPIS

Contoh Keterkaitan Strategi Bisnis, Strategi

IS, dan Strategi IT

Membuka akses ke potensial pelanggan

di seluruh Indonesia

Mengembangkan aplikasi berbasis Web

Menggunakan teknologi informasi berbasis

sistem terbuka agar bisa di view oleh berbagai

platform

Strategis

Teknis

Example: Alignment of Business vs. IS vs. IT Strategies

Business

Strategy

IS Strategy IT Strategy

Marketing Borderless User Web-based system

Financial Transfer based payment Centralized system

HRD Learn and re-learn LMS

Operational Speed to market Control system

Etc. Etc. Etc.

An Applications Portfolio for the ‘Combined Era’

McFarlan ‘84

So… What’s an IS/IT Strategy?

IS/IT strategy is composed of two parts IS component IT component

IS strategy defines the organization’s requirement for information systems to support the overall strategy of the business

The IT strategy is outlining the vision of how the organization’s demand for information and systems will be supported by IT

It addresses the provision of ICT capabilities and resources and services such as IT operations, systems development and user support

Start thinking about the examples of IS/IT Strategy!!

Implications of Competitive Business

Strategy to IS/IT Strategy

How can IS/IT affect the nature and value

of the product or service and its life cycle?

Generate a new product or a new line of

business

Enable products to be designed or delivered

more quickly

Be used to add additional features or services to

increase the product’s value

How can IS/IT affect the demand for products and services, segments more effectively, extend them geographically, or provide new distribution channels to reach the market?

Enable to reach more appropriate customers

Enable to match our different products/services to customer appropriately

Enable the product/service to be distributed in new ways to the customers

Enable to get closer to the market-place rather than deal through intermediaries

Continued..

How can IS/IT affect the cost base of the key

processes in the industry or change the balance in the

trade-off between flexibility and standardization?

Enable the product/service to be produced more

economically

Enable production and associated logistics to be integrated

to produce greater flexibility of resource use

Enable a higher quality of product or service to be offered

at a much lower cost than traditionally

Continued..

Examples of How IS/IT has affected the competitive forces

in the airline industry

How can IS/IT build barriers to new

entry?

By increasing IT entry cost for reservation systems.

By tying in distribution channels (travel agencies).

How can IS/IT build in switching costs

for customer?

By linking purchasing and remittance systems to reduce

overheads of customer.

Discount/volume packages to discourage piecemeal

purchase.

How can IS/IT change the basis of

competition?

Lower costs: optimize yield per aircraft.

Differentiate service:reconfiguring aircraft due to

demand.

Niche/focus service into high yield sectors (business

travel)

How can IS/IT change the balance of

power in supplier/customer

relationship?

Agent is constantly aware of seat availability of

competing airlines.

Airline can readily promote unsold capacity via chosen

agents.

How can IS/IT generate new

products/services?

Integrated travel package to high mileage business

customers—by passing agencies.

New routes/schedule to cater for demand.

Impact of Competitive Forces and Potential

IS/IT Opportunities

Key force

impacting the

industry

Business implications Potential IS/IT effects

Threat of new

entrants

Additional capacity

Reduced prices

New basis for competition

Provide entry barriers or reduce access by: exploiting

existing economies of scale, differentiate products or

services, control distribution channels, segment markets

Buyer power

high

Forces prices down

Demand higher quality

Require service flexibility

Encourage competition

Differentiate products or services and improve price or

performance

Increase switching costs of buyer

Facilitate buyer product selection

Supplier power

high

Raises prices or costs

Reduced quality of supply

Reduced availability

Supplier sourcing systems

Extended quality control into suppliers

Forward planning with supplier

Substitute

products

threatened

Limits potential market and profit

Price ceilings

Improve price or performance

Redefine products and services to increase value

Redefine market segments

Intense

competition

from rivals

Price competition

Product development

Distribution and service critical

Customer loyalty required

Improve price or performance

Differentiate products and services in distribution

channel and to consumer

Get closer to the end consumer—understand the

requirements

Why is IS/IT Planning Important?

IT Strategy is the process of defining the strategic use

of technology in an organization.

The IS/IT Planning process ensures efficient and

effective investment of IT to support the business

IT is More Critical to Corporate Success

The use of IT is increasingly pervasive

Enterprises are discovering that IT can influence the

relative performance of most departments

Results of Lack of IS/IT Planning

Failed of IS/IT projects

We see IT projects which lacks direction, weak

in scope, have little of no identification of

Critical Success Factors.

Inefficient use of investment in IT

Bad name for IT professionals and due to failed

IT implementations

Is IS/IT so important? What is your view on this?

IS/IT Planning in Indonesian

Organizations: Realities

Justification for auditing purposes

Idea often comes bottom up: hence the challenges

Do not believe in documentation: hence the

approach is often less formal

Difficult to get buy-in from management who

would rather see IT implementation projects

Who’s project is this: an IT department project?

Anything else?

Trends in IS/IT Planning

We will see more ‘formal’ IS/IT Planning activities with

increase of IS/IT dominance as an integral part of

business

IS/IT Planning will need to be done faster, with the

faster trend of technology development: Cloud

Computing, Broadband, Mobile Technology

Clear definition between business plan, IS/IT planning

and IT implementation will become more and more

blurred as technology will continue to drive businesses

stronger

Do you believe on this trend?

Exercise Your Thought

Explain the evolution roles of IT/IS in an

organization?

What are IS/IT strategies?

Explain the relationship of Business, IS/IT

strategies?

How external forces influence business

strategy and IS/IT strategies

What are the challenges of IS/IT Plan in

Indonesia?