CH 01

Sultan Qaboos University
College of Economics and Political

Science
Department ofINFS
Information
4461 systems
Strategic Information Systems
Dr. Rafi Ashrafi FBCS PMP CEng
Chapter 1
The Information Systems Strategy Triangle
Keri Pearlson, Carol Saunders, and Dennis Galletta

© Copyright 2020
Managing and Using Information Systems:
John Wiley & Sons, Inc.
A Strategic Approach – Seventh Edition
Kaiser Permanente (KP) Opening
Case
• What was KP’s business strategy in 2015?
• On what were bonuses to doctors based under the “fix me” system?
• What would the new idea be called instead of a “fix me” system?
• What is the new basis for end-of-year bonuses?
• What goal alignment has helped KP’s success?
• What IS components are part of this?
• Could only the IS components be changed to achieve their success?
• Could only the strategy be changed to achieve their success?
• Have they been successful through 2019?
© 2020 John Wiley & Sons, Inc. 2

What is a “Strategy?”
• Coordinated set of actions to fulfill objectives, purposes, or goals
• It sets limits on what the organization seeks to accomplish
• Starts with a mission
Company Mission Statement
Zappos To provide the best customer service possible. Internally we call this
our WOW philosophy.
Amazon To be Earth’s most customer-centric company, where customers can

find and discover anything they might want to
buy online, and endeavors to offer its customers the lowest possible
prices. . .(recognizing the importance of). . .
Consumers, Sellers, Content Creators, and Developers & Enterprises.
L.L. Bean Being outside brings out the best in us. That’s why we design products
that make it easier to take longer walks, have deeper talks and never
worry about the weather.
3
© 2020 John Wiley & Sons, Inc.
The Information Systems Strategy Triangle
Business Strategy
Organizational Strategy Information Strategy
These need to be balanced.

What is a business strategy?
• It is where a business seeks to go and how it
expects to get there
• It is not a business model, although it includes
business models as one component of a business
strategy
• Business models include subscriptions, advertising,
licenses, etc.
• Business models do not include where the business
seeks to go, and only the revenue portion of how it
expects to get there
Generic Strategies Framework
• Michael Porter: How businesses can build a
competitive advantage
• Three primary strategies for achieving
competitive advantage:
• Cost leadership – lowest-cost producer.
• Differentiation – product is unique.
• Focus – limited scope – can accomplish this via cost
leadership or differentiation within the segment

Three Strategies for Achieving
Competitive Advantage

Strategic Advantage
Uniqueness
Strategic Target
Perceived by Low Cost Position

Customer
Industry Wide Differentiation Cost Leadership
Particular
Segment Only Focus

Three Strategies for Achieving
Competitive Advantage
Examples

Strategic Advantage
Uniqueness
Strategic Target
Perceived by Low Cost Position

Customer
Industry Wide Differentiation Cost Leadership

Progressive; Apple Wal-Mart
Particular
Segment Only Focus
Marriott Ritz Carlton

Dynamic Strategies
• Beware of Hypercompetition
• Can lead to a “red ocean” environment
• Cutthroat competition – zero sum game
• Every advantage is eroded (diminished) — and become a
cost.
• Sustaining an advantage can be a deadly distraction from
creating new ones.
• Goal of advantage should be disruption, not sustainability
• Initiatives are achieved through series of small steps. Get
new advantage before old one erodes.
• Better to adopt a “blue ocean” strategy
• Change the industry; create new segments/products

Creative Destruction
• Steve Jobs at Apple:
• Stated that if a firm does not cannibalize its own
products, competitors would do it for them.
• The iPod was cannibalized by the iPhone and
iPad while it was selling extremely well!
• Obviously it worked out for Apple to do so.

Summary- Strategy
Strategic Approach Key Idea Application to
Information Systems
Porter’s generic strategies Firms achieve competitive Understanding which

advantage through cost strategy is chosen by a
leadership, differentiation, firm is critical to choosing
or focus. IS to complement the
strategy.
Dynamic environment Speed, agility, and The speed of change is

strategies aggressive moves and too fast for manual
countermoves by a firm response making IS critical
create competitive to achieving business
advantage. goals.

Organizational Strategy
• What is organizational strategy?
• Organizational design and
• Choices about work processes
• How do you manage organizational, control, and
cultural variables?
• Managerial Levers

Figure 1.5 Managerial Levers model
IS Strategy
• What is an IS Strategy?
- The plan an organization uses in providing
information services.
• Four key IS infrastructure components:
• Hardware
• Software
• Networks
• Data

Information systems strategy matrix.
What Who Where

Hardware The physical devices System users and Physical location of
of the system managers devices (cloud,
datacenter, etc.)
Software The programs, System users and The hardware it

applications, and managers resides on and
utilities physical location of
that hardware
Networking The way hardware is System users and Where the nodes,
connected to other managers; company wires, and other
hardware, to the that provides the transport media are
Internet and to other service located
outside networks.
Data Bits of information Owners of data; data Where the

stored in the system administrators information resides

Example: Illustration in a Consulting Firm
What Who Where
Hardware Laptops, servers to Consultants have Laptops are mobile;
store info and back laptops, managed by servers are
up laptops the IS Dept. centralized
Software Office suite; Software is on Much resides on

collaboration tools consultants’ laptops laptops; some only
but managed resides on servers
centrally
Networking Internet; hard wired ISP offers service; Global access is

connections in Internal IS group needed; Nodes are
office; remote lines provides servers and managed by ISPs
from home, satellite, access
or client offices
Data Work done for Data owned by firm Resides on cloud

clients; personnel but made available to and copies “pulled”
data consultants as into laptops as
needed needed.

One New IS Strategy: Social
Strategy
• Collaboration
• Extend the reach of stakeholders to find and connect with
one-another
• Engagement
• Involve stakeholders in the business via blogs;
communities
• Innovation
• Identify, describe, prioritize new ideas

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Sultan Qaboos University

College of Economics and Political

Keri Pearlson, Carol Saunders, and Dennis Galletta

© 2020 John Wiley & Sons, Inc. 2

Amazon To be Earth’s most customer-centric company, where customers can

Organizational Strategy Information Strategy

These need to be balanced.

© 2020 John Wiley & Sons, Inc. 6

Perceived by Low Cost Position

Industry Wide Differentiation Cost Leadership

© 2020 John Wiley & Sons, Inc. 7

Perceived by Low Cost Position

Industry Wide Differentiation Cost Leadership

© 2020 John Wiley & Sons, Inc. 8

© 2020 John Wiley & Sons, Inc. 9

© 2020 John Wiley & Sons, Inc. 10

Porter’s generic strategies Firms achieve competitive Understanding which

Dynamic environment Speed, agility, and The speed of change is

© 2020 John Wiley & Sons, Inc. 11

© 2020 John Wiley & Sons, Inc. 12

© 2020 John Wiley & Sons, Inc. 14

What Who Where

Software The programs, System users and The hardware it

Data Bits of information Owners of data; data Where the

© 2020 John Wiley & Sons, Inc. 15

Software Office suite; Software is on Much resides on

Networking Internet; hard wired ISP offers service; Global access is

Data Work done for Data owned by firm Resides on cloud

© 2020 John Wiley & Sons, Inc. 16

© 2020 John Wiley & Sons, Inc. 17

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