Cope with varying robustness of business Essay

Earl ‘s multiple methodological analysis

Earl ‘s multiple methodological analysis provides a agency of:

  1. Clarification of the concern demands and scheme in information systems footings.
  2. Evaluation of current information systems proviso and usage.
  3. Invention of new strategic chances.

1. Exceed down – elucidation – leg 1

Earl ‘s definition of a suited method for leg 1 to clear up concern demands in IS footings:

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& A ; lsquo ; a methodological analysis that is easy understood and used by line and general directors, it can get by with changing hardiness of concern scheme, it does non devour excessively much clip or resource, it can be repeated as fortunes necessarily alteration and, as a consequence of these demands and because it could non accomplish anything else, it points to directional IS demands and non elaborate specifications. ‘

The & A ; lsquo ; Critical Success factors ‘ attack meets many of the demands of the definition.
There are otherssee & A ; lsquo ; Strategic Management and Information Systems ‘ Wendy Robson 5.7 page 154.
See & A ; lsquo ; IT Strategy for Business ‘ Joe Peppard page 83.

2. Bottom Up – rating – leg 2

Most administrations merely have a obscure apprehension of the possible and capacity of their present IT systems. The proficient position and backroom perceptual experience of IT may make a barrier. To understand the present systems a bottom up analysis is carried out. This involves an audit or study. Equally good as the proficient item the user/specialist interface is examined. The value of the system to the administration must besides be ascertained.

In this rating the undermentioned inquiries must be asked:

How dependable is the system?
How easy is it to keep?
How cost effectual is it?
What is the impact on the concern?
How easy is it to utilize?
How frequently is it used?
What is the province of our specializer – user relationship?

Other considerations might be the interactivity of the systems. These interactions and the rating can be shown diagrammatically utilizing systems maps or other agencies. The present systems can so be examined for strengths and failings.

The top-down concern attack and the bottom-up systems attack do non supply an chance to work extremist new thoughts for working the competitory advantage of IT. The concern attack examines the & A ; lsquo ; whats ‘ and does non analyze the & A ; lsquo ; hows ‘ . The bottom-up attack is constrains extremist thought by the presence of the rating procedure and the strengths and failings of the bing systems. A more degage attack is needed.

3. Inside out believing – sidelong thought

It is frequently inspiration and creativeness that produces the brightspark thoughts that can bring forth the beginnings of an IS scheme for competitory advantage. Ideas brought from unrelated sectors can frequently be successfully applied. The right ambiance must be nurtured to bring forth this creativeness.

Runge suggests the undermentioned six features associated with IT innovation| :

  • The thought frequently emanates from a commercial director.
  • The thought was backed by a senior director who became the undertaking title-holder.
  • The competitory advantage was added to an bing system ; evolutionary procedure.
  • The thought was developed outside of the IT control restraints.
  • Customers were involved in the develoment.
  • The application was given a high profile and was marketed.

External Analysis

The three legs of Earl ‘s multiple methodological analysis have considered IS scheme from an internal position. It is of import to besides see this scheme from an external point of position i.e. rivals, clients, consumers etc. There are techniques that can assist clear up this attack. TheSWOTmethod is a suited campaigner that explores both internal and external positions.

A technique such as SWOT is utile when sing an external position of the three legs of the mulltiple scheme.

Porters five forces theoretical account is a utile theoretical account for sing the external position on IS scheme.

Boddy et al suggest that Porter ‘s theoretical account can be used to build an IS scheme.

Considerations when utilizing the multiple methodological analysis.

The usage of methodological analysiss does non intend a & A ; lsquo ; cookery book ‘ attitude should be taken the execution of schemes. Methodologies are utile overall models but the context in which they are used needs consideration every bit good as experience.

Experience suggests that:

  • important differences existed in different houses ;
  • IS scheme preparation inherently seemed a more complex affair in some houses than others ; and
  • attacks in pattern did non ever fit either the popular prescriptions or the histories in instance documentated articles.

Infrastructure-led may underscore leg 2 – bottom-up attack.

Business-led may underscore leg 1 – top-down attack.

Opportunity-led may underscore leg 3 – inside-out.

Alternate attacks

There are many other attacks in structuring IS scheme. One such attack is Porter ‘s five forces theoretical account. This is besides utile in concurrence with Earl ‘s methodological analysis. The followers is reproduced from Boddy et Al.

IS alterations the footing of competition: chances and menaces

Computer-based information systems are altering competitory conditions in many indus-tries. There are many tools and techniques which can be used to analyze the relationship between scheme and information systems, depending on their intent. In this book we can merely exemplify one of these attacks, and the Five Forces theoretical account originally developed by Michael Porter seems the most appropriate to present. It can be used at the degree of the single house to measure the possible impact of information systems on the competitory place of the house. A comprehensive history of the many other positions on the subject will be found in Robson ( 1997 ) . Figure 4.5 is based on Porter ‘s model, and shows that IS represents an chance to procure a strategic advantage by utilizing it to beef up one or more of these forces. Similarly, it represents a competitory menace, if other administrations are able to utilize IS more efficaciously in these ways.

Information systems and the menace of new entrants

Directors can utilize IS on this force by utilizing it to cut down the menace from new entrants by raising barriers, or by utilizing it themselves to come in new markets. Using information systems to raise entry barriers The Caterpillar instance illustrates that the maker of the machine links the client electronically with the service administration. Because of that electronic nexus, it is non easy for a client to travel to another service administration for fix and care. This strengthens Caterpillar ‘s place as a maker and as a service supplier. The system is so complicated, advanced and expensive that it is difficult for bing rivals to copy. It is even more hard for new entrants in this market to develop a similar system. The box gives two other illustrations. In the IS industry itself & A ; lsquo ; puting the criterion ‘ is really of import to deriving a strong place. Most clients want to utilize equipment that has become established as the industry criterion. Examples are Microsoft word-processing package, Intel computing machine french friess and Netscape Internet browsers. It is really hard for new entrants to get the better of these entry barriers, taking to a victor takes all ‘ state of affairs in many sectors of the market.

Using IS to come in markets more easy

The Caterpillar instance illustrates how the company uses its information system to achieve a stronger place in the care market. The system can beef up the relationship with purchasers of Caterpillar equipment and supply them with a wide after-sales service. Caterpillar becomes a stronger rival of independent care companies in new markets. In formation systems and the menace of replacements Companies can utilize information systems to change this force by distinguishing their merchandises, or by making new 1s which they can utilize to endanger rivals.

Using information systems to distinguish merchandises and services

The Caterpillar instance shows the company utilizing the information system chiefly to better the velocity and quality of client service. When the system notes a impairment the service starts instantly and the really capital-intensive machine will be repaired shortly. This saves the client a great trade of money. Other companies use the Internet to make and orche-strate active client communities. Examples include Kraft ( ) , Intel ( ) , Apple ( ) and Harley Davidson ( ) . Through these communities the companies become close to their clients. They can larn and introduce with merchandise or service betterments that would otherwise be impossible. The research sum-up box below explains why it is indispensable for information service suppliers to distinguish their merchandises. Using information systems to make new merchandises and services Telephone and Internet banking are comparatively new phenomena which have merely become possible with new systems. The same is true of companies that use the power of database engineering to offer new services in client relationship direction and direct market-ing. Wide Internet entree has generated a immense addition in concerns offering new services. These include electronic auctions, hunt engines, electronic retail merchants, electronic hubs ( Dutta and Segev, 1999 ; Timmers, 2000 ; Kaplan, 2000 ) , and Internet suppliers. Caterpillar created new care services, and the following box gives another illustration. Information systems and the bargaining power of providers

Increasing power of providers

Suppliers can increase their power by utilizing information systems to track much more closely the costs of supplying services to clients. They can put monetary values consequently, or make up one’s mind that they do non desire a peculiar piece of concern. For illustration, air hoses use yield direction systems to track existent reserves against traffic prognosiss for any flight, and so set monetary values for the staying seats to maximize gross. Stepanek ( 1999 ) reports how Weyerhaeuser Doors uses an Internet-based system to, amongst other things, manage orders from its distributers. This allows the company to pull off its internal procedures more expeditiously, but besides to measure much more accurately the value of each order, and the overall public presentation of its distributers. This enables it to decline unprofitable orders, and to be more selective about the distributers which it supplies. Customer relationship direction systems are a presently popular illustration of providers ‘ ability to track clients ‘ demands more accurately, therefore increasing the providers ‘ power over the client.

Decreasing power of providers

Information systems can besides be used the other manner around. Customers can utilize information systems to beef up their place in the market place at the disbursal of providers ‘ power. Ford and General Motors have set up electronic market places and press their providers to utilize that system to fit their supply with the demand of Ford and GM. The Economist ( 6 November 1999 ) commented:

Ford and GM ‘s e-business revolution will non be confined to them entirely. Their determination to travel online will ruffle through the 50,000 or so houses they trade with. The auto shapers are careful to state that none of their providers will be compelled to utilize their new portals, preferring merely to show that the benefits-cost nest eggs, the entree to new clients, the faster clip to market, the sheer value of the information will do it an obvious pick. But the world is different. Ford and GM are puting a batch in their e-business substructure and great hopes are siting on it. Suppliers that want to go on to make concern the old manner will quickly go ex-suppliers – and before long ex-companies.

The following subdivision about the usage of information systems to alter the power of purchasers explores this subject farther. This illustrates that information systems are progressively inter-organisational phenomena, instead than concealed back-office systems. Inter-organisational systems can be used to co-operate every bit good as to vie with concern spouses, whether providers or clients. Powerful parties tend to press less powerful 1s to follow their systems.

Information systems and the bargaining power of purchasers

A good illustration of the balance of power being altered is when retail ironss use modern communicating engineerings to do electronic links with their providers. Such systems cut down stock list costs and warehouse disbursals and better fulfillment clip and informa-tion flows. For case, they encouraged the farther concentration of retailing houses which so had much more power over their providers. The retail merchant ‘s computing machine continually monitors its providers ‘ finished goods stock lists, mill programming, and committednesss against its agenda. The intent is to guarantee the shops ever have equal stocks. A provider that is unwilling to fall in the system is likely to lose concern. The box illustrates how Wal-Mart used this thought.

More by and large, purchasers can utilize the web to entree more providers, and to compare monetary values for standard trade goods much more widely than was practical with earlier engineerings.

Information systems and the strength of competition

Two ways of utilizing information systems in the procedure of competitory competition are by cut downing costs and through more effectual direction.

Using IS to cut down costs

On-line stock list systems make it possible to do extremist alterations in fabricating supply systems. This greatly reduces stock list degrees, and the costs associated with them. Car makers are merely invoiced for constituents when the completed assembly leaves the mill. When the system knows that X headlights have been used, it passes the information to the constituent provider. They send an ( electronic ) bill for the compon-ents used, and supply replacings. There are similar systems in retailing, where providers like Unilever and Procter & A ; Gamble pull off the stock list of their biggest clients. These inter-organisational systems cut down stock list costs – but non merely through lower stock list degrees. They besides cut down the demand for working capital and let a ( smaller ) buying section to concentrate on non-routine orders and strategic supply affairs. The Internet enables big companies to reassign their buying operations to the web. Secure web sites connect providers, concern spouses and clients all over the universe. This makes it easier for new providers to offer for a portion of the available concern, makes costs more crystalline, and improves the administrative efficiency of the supply procedure.

Using IS to enable more effectual direction

A travel agent ‘s subdivision accounting system can now supply elaborate forms of concern to directors, enabling them to supervise tendencies more closely, and to take better-informed pricing and promotional determinations. Another illustration is Ahold, a Dutch retail merchant, which achieved much greater public presentation in the supply concatenation by utilizing its data-mining capableness and cognition extraction in its client database. Management information systems can spread out the span of control of single directors, which can back up the flattening of administrations. These illustrations show that information systems may go chances for making, back uping or altering generic schemes. On the other manus rivals have similar chances – there are besides costs and hazards associated with utilizing information systems in this manner.

IS can besides be a menace

New entrants in the fiscal services sector have been able to present telephone bank-ing through call Centres really rapidly. They were able to take advantage of the fact that they did non hold an established subdivision web, and so could utilize the new engineering really rapidly. The engineering worked to the disadvantage of established Bankss with many local offices. They found it dearly-won to shut subdivisions. The engineering was an advantage to the new, a disadvantage to the old. This illustrates a more general point that, for all the possible chances, IS can besides be a menace.

Information systems enable new competition

Computer-based information systems represent chances for one concern and menaces to another company. In retailing, big ironss have benefited at the disbursal of smaller stores, big providers have benefited at the disbursal of smaller 1s, and big retail merchants have more power over providers. Any usage of IS by one company to come in a new market, cut down costs and so on, is a possible menace to a rival. They lose out if they have non seen the possibility, or have managed execution less efficaciously. The London Stock Exchange is threatened by the fact that modern engineering allows major establishments to merchandise portions straight, instead than utilize the market establishment. The job is increased by the fact that viing exchanges have implemented new information systems more efficaciously. They are likely to derive a larger portion of a smaller market.

Information systems place new demands on direction clip

Implementing a major system takes a great trade of direction clip – a cost that directors seldom include when measuring investings. They require directors to look inward at ( of import ) operational jobs of staff, system design, security. The danger is that they do non look at ( even more of import ) issues of how to utilize the systems for strategic advant-age. In other words: directors are frequently equilibrating between a & A ; lsquo ; job orientation ‘ and an & A ; lsquo ; chance orientation ‘ . Senior direction often underestimates the resources required to implement new information systems, particularly of pull offing the many organ-isational deductions.

Implementing an information system successfully is hard

Many research studies remark on the troubles of implementing information systems. This is particularly true of systems which involve many stakeholders with different involvements, or those which are advanced in other respects. They frequently take topographic point in an unsure environ-ment, from a competitory every bit good as from a technological point of position. These uncertainnesss make it hard to be after a alteration over a longer clip. At the same clip, the bets are acquiring higher in footings of costs, people and other resources.

Even when applications work, there may be downsides

Directors frequently buy in expertness for development, operations and consultancy. These providers become the chief experts of a company ‘s IS resource. This dependence can be misused. Their deficiency of cognition and penetration in the administration causes major jobs. They have trouble in negociating successfully with the external suppliers and important company cognition becomes the plus of other companies.


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