This paper focuses on the identification of key aspects that are associated with information systems (IS). In particular, the report begins with the definition of IS and how it is used and managed within an organization. It is clearly explained that IS plays an integral role in the strategic business decision, an organization’s internal and external environment, and a competitive advantage. IS capability that implies the ability of a company to integrate appropriate knowledge to create value and ensure sustainable competitive advantage are considered in connection with the organizational capability theory. Furthermore, the paper explores the ways of how to make Strategic Information Systems Planning (SISP) successful. The five dimensions of success were identified and put in a larger context. Ultimately, IS capability and SISP integration are discussed, paying attention to a contingency model and resource-based view (RBV). It is stated that such attributes as organizational and environmental, including external and internal elements, identify the relationships between the mentioned issues.
Demonstrate Knowledge of How Information Systems are Used and Managed Within an Organisation
The modern ever-changing world sets new requirements in the field of IS as they become more sophisticated and demanding. Nowadays plenty of organizations are looking for IS not only to maintain their current positions but also to develop new competitive advantage and boost up their effectiveness. Today there is no such a sphere of production and management, which would not have applied information technology and information systems. IS and computerization allow improving and facilitating the management processes and procedures (Stair & Reynolds 2015). Also, IS can be used to meet the human needs of an organization. For example, IS is widely used in the training of employees. They help to form the identity of independent information, learn to make the right decision, and use information resources effectively. IS in the learning process prepares employees who may use IS capabilities in practice creatively, quickly, and efficiently.
The use of IS is traditionally caused by the desire to address challenges that are encountered by a company. For example, it may be documenting difficulties or organizational issues that are successfully managed by the implementation of technology. Speaking of the internal environment, it is essential to emphasize that IT helps to monitor progress, pointing out any deviations and achievements, built an effective infrastructure, and perform some other tasks within a company. Lientz (2012) states that “the value of IT lies in its contribution to the business through business process performance and use of knowledge and information for cumulative improvement” (p. 7). As for the external environment, Strategic Information Systems Planning (SISP) can be used to identify the competitive advantage, monitor competitors, and address occurring needs. In general, information technologies make it possible to efficiently manage all types of resources and work confinement. Since resources are always limited, the key to success is the adoption of correct and timely management decisions concerning the concentration of resources to achieve the strongest effect (Ward & Peppard 2000). The information provided by IS promotes the concentration of resources at the right time and the right place to address the main problems.
Nowadays organizations strive to become leaders in their field to gain maximum profit and meet the customers’ expectations. According to Nolan’s three era model, today’s third era focuses on strategic information systems and is likely to be followed by the fourth era of e-business to some extent (Reimers et al. 2013). The mentioned eras present the core idea of IS management and use that implies the change of nature of organizations to become competitive. In particular, continuous evaluation and re-evaluation of business decisions are the most important nowadays (Clark 1996). If earlier, at the beginning stage of IT and IS development, computing was sufficient to ensure the effective performance of an organization, today there is an obvious need to be engaged in IS and IT and understand complex interactions between technology, management, and application trends. In this connection, one may note the establishment of strategic planning in the context of IT / IS. Lientz (2012) argues that the key benefit of IS strategic planning is “to enable the delivery of more rapid benefits of IT to the business through process change” (p. 10). Thus, information systems are used in identifying demand and supply of an organization, its competitive advantage, benefits provision, etc., while they are managed to ensure strategic decision-making and the overall effectiveness of an organization.
Demonstrate Understanding of Information Systems Capability
It is possible to note the resource-based view (RBV) that implies the utilization of various resources, including human, business, and technical, and considering them as IS capabilities. In other words, IS capability “refers to the ability of firms to build unique capabilities that can leverage their resources” (King, 2015, p. 98). This means that IS promotes the specification of sustainable competitive advantage. Considering that plenty of companies utilize IS, it is of great importance to use them properly to come up with innovative ideas and solutions. IS consists of various competencies each of which is composed of such resources as a business, technology, and human.
The key to IS is the knowledge that can be divided into three components:
- Hardware. It is a physical or logical structure of the layout configuration of the machines, systems, and other equipment. This means the alignment of production tasks (products and/or services) and management with the achievement of the desired goal or purpose.
- Software. It represents a set of rules, guidelines, and algorithms that are required for the operation of technical equipment. It also includes programs, agreements, standards, and rules for the use that are aimed at the coordination of individual tasks and the process as a whole. This component answers the question of how.
- Brainware. This is algorithmic or intelligent software. Depending on the planned or expected results and objectives, it supports the appropriateness of the use and deployment of hardware and software, as well as its configuration in every single case (Stair & Reynolds 2015). This component answers the questions of what and why.
Thus, IS may include data sources, databases, methods of storage, production, distribution. and exchange of information. They are important assets of an organization. A company needs comprehensive information related to its customers, internal processes, or the financial implications of the decisions taken, for example. Because IS are not material resources, it may be difficult to evaluate their effectiveness. In this connection, some companies developed a strategic factor of awareness that estimates the proportion of available information concerning the expected need for it (King 2015). The availability indicator may be the percentage of the necessary data from the real-time feedback mode and the percentage of employees that directly communicate with customers.
The identified mechanisms of IS present a rather significant basis for the beneficial strategic performance of an organization. According to Khani et al. (2011), “business and IT knowledge fusion, flexible IT infrastructure, and effective utilization process” (p. 31). It is essential to note that IS capability closely interacts with other organizational capabilities, including cross-functional capabilities and broad functional capabilities. The first group of capabilities is composed of a product, quality management, and customer support. The elements of the second group of capabilities result from the first one and involve human resource management (HRM), IS, marketing, and research and development (R&D) capabilities. The organizational capability theory is based on the detailed specification of functions by the objectives and strategies of a certain team, department, or any other organizational division. It involves the delegation of authority, clear definition of responsibilities and the rules of formal relations, and the organization of work in detail. The organizational capability theory focuses on an entire organization rather than on the work done by individual units or members.
At the same time, organizational capability implies the ability of a company to implement specific knowledge repeatedly, thus ensuring value creation. King (2015) considers that employees are the main actors in inappropriate knowledge use and integration. Therefore, it is possible to note that experts are critical to building other capabilities within an organization based on their professional skills and knowledge. The efficiency of an organization can be enhanced based on motivation, group behavior characteristics, types of leadership, participation, authority, respectful relations, the definition of responsibilities, and so on. IS capability can be applied by strategic capability architecture (SCA).
Demonstrate Understanding of How Strategic Information Systems Planning Can be Successful
SISP is the process of determining a set of applications that help an organization in the execution of its goals and achievement of its objectives. SISP can benefit an organization as a result of bringing together the information systems’ users and professionals in this area, as well as the establishment of a complementary understanding of the value of information systems as well as the problems associated with them (Laudon & Laudon 2000). Besides, such planning can help an organization to establish priorities in the development of IS using ranking systems for their effectiveness and strategic value. Thus, SISP contributes to the identification of the planned set of applications that match the corporate strategy and could create a competitive advantage.
The concept of SISP developed gradually. At first, planning was carried out in a quite formal way, taking into account plenty of issues. Later, the core objective was to analyze the competitiveness of a company along with its competitive advantages. As soon as the organizations began to realize that IS can increase their internal efficiency, SISP was applied to emphasize the business process reengineering. Because both business strategy and IS are changing rapidly, the development of an effective plan that would help achieve the goals of a company becomes challenging (Reimers et al. 2013). The success and even survival of organizations in today’s market are largely dependent on the development and application of a clear and innovative strategic plan for information systems.
Five success dimensions indicate the success of SISP. It seems important to point each of them briefly. The first dimension of alignment states that business strategy and IS integration promote competitive aspects of an organization. The second dimension of analysis focuses on the internal organization of a company, in particular, on a range of internal processes and technologies. The cooperation dimension assumes that strong collaboration between stakeholders is likely to decrease conflict occurrence The improvement in capabilities is essential to achieve successful SISP and maintain it, for example, by learning. Ultimately, the dimension of a contribution implies that the promotion of various organizational attributes such as profitability of the decision-making process also serves as a success indicator.
Since IS strategy becomes more important for companies, when it comes to the information system management, its selection, introduction, and integration, these processes take a long time and significant efforts. In this context, the SISP scope can be narrowed to the specifics of the implementation and planning of the system. There is a separate series of SISP methodologies, such as Business Systems (BSP), (Strategic Systems Planning (SSP), and Information Engineering (IE) (Laudon & Laudon 2000). This division helps to structure the working process and take into account various aspects. Given the preceding, it is possible to assume that SISP’s successful integration is characterized by subsistence opportunities of both the technology market and the enterprise, as well as the role given to IS in an organization.
The scope of the SISP strategy can be divided into two components: IS architecture and the organizational component. A wide range of SISP objectives includes: IS alignment with business strategy; the identification of target business units for the use of different information components; specific applications for use in the operation of these business units; the definition of architectural options for the system; the definition of the technological infrastructure and required organizational changes (Ward & Peppard 2000). It is also important to point out the fact that one of the tasks of SISP is to keep management in touch with what a company has, in particular, what opportunities and resources. Company leaders should be aware of the current situation, both inside and outside an organization.
Demonstrate Understanding of IS Capability and SISP Integration
The relationships between SISP integration and IS capability are studied insufficiently. In this regard, the question of what IS capabilities are needed to have successful SISP can be posed. In other words, what skills and knowledge need to be utilized to achieve effective SISP in the context of an organization? The above question can be answered based on the contingency model and RBV that was mentioned earlier in this report (Laudon & Laudon 2000). First of all, it is necessary to point out that such an approach helps to ensure an in-depth understanding of SISP meaning. As a result, the management of a company would be able to invest more in its competitive advantage and appropriate business solutions.
Nonetheless, the relationships between IS capability and SISP integration are subjected to the impact of some other factors as well. Speaking more precisely, one may note that environmental and organizational attributes can be emphasized. At the same time, some scholars distinguish between the environmental the external and internal attributes (Khani et al. 2011). The external attribute pays attention to the outside means such as the current state of the industry, economic stability, and so on. The management style and effectiveness, employee satisfaction, and organizational culture can be attributed to the internal elements. The identified attributes compose the so-called moderating factors that affect the integration of SISP and IS capabilities within an organization.
Clark, NL 1996, Competitive advantage through IT, Wiley, New York.
Khani, N, Nor, KM, Hakimpoor, H, Bahrami, M & Salavati, S 2011, ‘IS / IT capability and strategic information system planning (SISP) success’, International Journal of Managing Information Technology, vol.3, no.3, pp. 28-37.
King, WR 2015, Planning for information systems, Routledge, New York.
Laudon, K & Laudon, J 2000, Essentials of management information systems, Prentice Hall, New York.
Lientz, B 2012, Breakthrough strategic IT and process planning, World Scientific, New Jersey.
Reimers, K, Guo, H, Li, M, Hie, B & Zhang, T 2013, Innovating in a learning community, Springer, New York.
Stair, R & Reynolds, J 2015, Fundamentals of information systems, Cengage, Boston.
Ward, J & Peppard, J 2000, Strategic planning for information systems, Wiley, New York.