Using Information Technology strategically

Seminar Paper, 2011

26 Pages, Grade: 2,0


Table of Content


1 Introduction

2 Review
2.1 Information Systems Strategy
2.2 Classictermsof strategies
2.3 Porter's Five Forces
2.4 Generic Strategies
2.5 TheValueChain
2.6 Scott Morton's Five Levels of IT-Induced Reconfiguration
2.7 Porter and Miller's Information Intensity Matrix
2.8 Wiseman, Rackoff and Ulrich strategic thrusts and targets
2.9 Earl's Procedure for Generating Competitive Strategies
2.10 Software and Business Strategies
2.11 Conclusion of thereview

3 Examples for implementation of IT
3.1 BAD Gesundheitsvorsorge und Sicherheitstechnik GmbH
3.1.1 BAD GmbH overview
3.1.2 Problems of the oldsystem
3.1.3 Opportunities with a new IT system
3.1.4 Solution
3.2 ASZ Arbeitsschutzzentrum in Thüringen
3.2.1 Process overview
3.2.2 Problems of the system
3.3 Dr.Med.MichaelSuchodoll
3.3.1 Dr. Med. Michael Suchodoll overview
3.3.2 Problems
3.3.3 Solution

4 Evaluation

5 Conclusion

6 Appendix

7 References


This report provides an evaluation of information technology (IT) strategies and their implementation in business, through an analysis and review of business models, illustrated through three case studies of business implementation.

Research demonstrates that when IT is fully integrated with business processes it results in improvements to efficiency, effectiveness and efficacy of the business, in turn those improvements can lead to competitive advantage. Two critical success factors are identified for successful business integration and implementation: good project management; and development of the IT strategy in line with the development of business strategy.

In conclusion, IT can make the difference between businesses being market leaders or laggards in the future, and at worst the difference between survival and failure. Current economic and market conditions have heightened the potential risk of failure but provides opportunity to those businesses that act fast to improve their Information systems (IS) in support of their business strategy. It is recommended, that world-class project methodologies are used when implementing IT and IS solutions. The project manager and team need to be carefully selected to ensure successful implementation against clearly defined success criteria within realistic time, budget and quality constraints. To ensure maximum integration with the business, the involvement of knowledgeable business process owners and end users is critical. Robust stakeholder management will not only ensure successful design but will help buy-in and implementation of the final solution.

The case studies used in this report are drawn from the author's experience of working with these companies

1 Introduction

Today, business is very demanding due to more discerning customers who want to buy high quality products and increasing competition. With rising costs it is important for business to increase revenue and reduce operating costs. There are different ways to realize it. Information Systems (IS) and Information Technologies (IT) are in this case signifying instruments.

2 Review

2.1 Information Systems Strategy

To understand the impact of Information strategy on organisations, it is useful to understand the relationship between business strategies, Information strategies and organisation strategies. This relationship will be shown in the figure 1. (Pearlson/Saunders 2006, p. 19)

Illustration not visible in this excerpt

Pearlson and Saunders said "A business strategy is the form by which a business communicates its goals." It is a plan where a business seeks to go and how it expects to get there. (Pearlson/Saunders 2006, p. 21)

The next important strategy in the triangle is organisational strategy. This includes the build up; manage, to control a company's work process and to describe the corporations design. Organisational strategy is a map for order to reach a company's aim and to implement its business strategy. (Pearlson/Saunders 2006, p. 28)

The last strategy in the triangle is Information system strategy. Pearlson and Saunders describe "That is the plan a company uses to providing information services." IS helps to find the corporate potential. (Pearlson/Saunders 2006, p. 30-31)

The Information Systems strategy Triangle is a high sensitive construct. If you want to chance one of the corners, it is necessary to evaluate the other two corners. (Pearlson/Saunders 2006, p. 33-34)

2.2 Classic terms of strategies

Answering questions is substantial to develop corporation strategies. These questions should contain the target and the measures about how to reach these aims. To explain Information strategies, we have to look at the classical side of strategy. (Porter 1999, p. 24)

2.3 Porter's Five Forces

To develop a good strategy, corporations have to look at the intensity of competitors in the same line of business. This is dependent on five fundamental strength of competition:

- The bargain power of suppliers
- The bargain power of buyers
- The threat of new entrants
- The threat of substitute products
- Rivalry among existingfirms

The purpose of strategy is to take a position how corporations influence the strength of competition for oneself.

2.4 Generic Strategies

After the analysis of the fifth strength, there are three different strategic estimates to be better than the competitors. (Porter 1999, p.75)

1. Cost leadership
2. Differentiation
3. Concentration to priorities (Focus)

The strategy of Concentration to priorities allows an organisation to limit its scope to a narrower segment of the market. It consists of two variations. The first, cost focus, the organisation tries to get a cost average within its segment. Secondly, differentiation focus, a company distinguishes product and service within one segment. This company achieves a local competitive advantage, even if this advantage does not reach the whole marketplace. (Porter 1999, p. 75)

Cost leadership means, that this company leads the same line in terms of less costs. This could be resulted by (Porter 1999, p. 71 - 73):

- Construction of manufacturing facility (increase in capacity)
- Control of fixed and variable costs
- Automation (implement IT)

Differentiation describes the strategy to manage something that the line of business sees as a unique. This strategy is divided in four groups (Porter 1999, p. 73 -74):

- Product
- Price
- Place
- Promotion

Due to uniqueness, organisations bind customers for long term. Also for competitors it is difficult to enter the market, because of high development costs. There is a high barrier for entrance. Sometimes a corporation develops a brand name. For customers it makes it easier to identify the product or service. IT can be used to support the differentiation strategy. (Porter 1999, p. 73 -74)

2.5 The Value Chain

Information can also impact another part of company. The definition says that the accumulation of occupation, through that a product will be designed, produced, distributed, delivered and supported, is a corporation. All these occupation are called value chain. A value chain consists of two main parts. The primary activities, which allocate directly the product and support activities, that against supports the primary activities. The value chain is a part the value system. The upstream processes are the suppliers and the downstream processes are the customers. (Porter, Miller, 1985)

Illustration not visible in this excerpt

Figure 2: The value chain (Porter, Millar 1985)

2.6 Scott Morton's Five Levels of IT-Induced Reconfiguration

According to Prof. Dr. Detlef Schoder (2003, quoted in Scott Morton, M. S. 1991), Scott Morton follows Porter's Five Forces and formulates two important levels to evaluate them, see Figure 3.

The first level is the evolutionary level. This level can be shared in locate exploitation and internal integration. (Prof. Dr. Detlef Schoder 2003, cited in Scott Morton, M. S. 1991)

- Locate exploitation: takes a closer look at the local efficiency and effectiveness of an information system.
- Internal integration: intends the integration among various systems and applications. It affects automation, rationalization and using a mutual IT platform. Through coordination and cooperation inside the corporation efficiency and effectiveness will be refine.

The second level is the revolutionary level. This level consists of three different parts. The business process redesign, business network redesign and business scope redefinition. (Prof. Dr. Detlef Schoder 2003, cited in Scott Morton, M. S. 1991)

- Business process redesign: includes a meticulous re-assessment and extensive chance of the value chain and the product process
- Business network redesign: Business processes, which are involved at the preparation and delivery of products, will be converted
- Business scope redefinition: "involving migration of functions across the enterprise's boundaries, to the extent of changing the organisation's conception of the business"

Illustration not visible in this excerpt

Figure 3: Five Levels of IT-Induced Reconfiguration (Prof. Dr. Detlef Schoder 2003)[ online]. Available from: pdf

2.7 Porter and Miller's Information Intensity Matrix

In Figure 4, Porter and Miller describe the connection between the Information content of the product and the information intensity of the value chain. For example, the cement industry needs a low information intensity of the value chain and a low information content of the product, compared to a higher level of information intensity of the value chain for the oil refining process. Products with high Information in both parts are Banking or Newspapers. There is a lot of information in the product process and in the product. Because the costs for hardware decrease and software will develop quickly and specifically adjusted for every company, many industries are using more and more information at the value chain and the product itself. (Porter, Miller, 1985)

Illustration not visible in this excerpt

2.8 Wiseman, Rackoff and Ulrich strategic thrusts and targets

Wiseman developed further the scale of Porters model. Furthermore Wiseman, Rackoff and Ulrich generated five strategies thrusts. (Figure 4) (Value Bases quoted in Wiseman, Rackoffand Ulrich 1985)

1. Differentiation: the company does something that is a unique at the market line
2. Cost: the company produces a high quality for fewer costs
3. Innovation: the corporation develops new products or innovates existing products
4. Growth: a corporation can grow in different ways Product growth, for example more similar products, bigger variance of one product or inclusion of new products
5. Alliance: treaty between two ore parties to achieve a common goal

These five strategies are oriented to suppliers, customers. (Value Bases quoted in Wiseman, Rackoffand Ulrich 1985)

Illustration not visible in this excerpt

Figure 5: strategic thrusts and targets [online]. Available from: (


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Using Information Technology strategically
University of Abertay Dundee
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Christian Kunert (Author), 2011, Using Information Technology strategically, Munich, GRIN Verlag,


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