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Strategic IT

Strategic IT shows the importance of view information systemas more than a set of technologies that support efficientbusiness operations, workgroup and enterprise collaboration,or effective business decision making. It is also important toview information system strategically, that is vital competitivenetworks, as a means of organizational renewal, and as anecessary investment in technologies that help a companyadopt strategies and business processes that enable it toreengineer or reinvent itself in order to survive and succeed intodays dynamic business environment.

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Competitive Strategy ConceptsThe strategic role of information systems involves usinginformation technology to develop products, services, andcapabilities that gives a company major advantages over thecompetitive forces it faces in the global marketplace.

Competitive Forces and Strategies

A company can survive and succeed in the long run only ifsuccessfully develops strategies to confront five competitiveforces that shape the structure of competition in its industry.

. The rivalry of competitors within its industry

!. The threat of new entrants into an industry and its markets". The threat posed by substitute products which might capture

market share

#. The bargaining power of customers

$. The gaining power of suppliers

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Basic Competitive Strategies

Cost Leadership Strategy. %ecoming a low&cost producer of products andservices in the industry, or finding ways to help its suppliers or customersreduce their costs or to increase the cost of their competitors.

Differentiation Strategy. 'eveloping ways to differentiate a firmsproducts and services from its competitors or reduce the differentiationadvantages of competitors.

Innovation Strategy. (inding new ways of doing business. This mayinvolve the development of uni)ue products and services, or entry intouni)ue markets or market niches.

Gro th Strategies. Significantly e*panding a companys capacity toproduce goods and services, e*panding into global markets, diversifyinginto new products and services, or integrating into related products andservices.Alliance Strategies. +stablishing new business linkages and allianceswith customers, suppliers, competitors, consultants, and other companies.

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Basic Strategies in the !usiness use of information technology

Lo er costs -se IT to substantially, reduce the cost of business process. -se IT to lower the costs of customer or supplier.

Differentiate 'evelop new IT features to differentiate products and services.

-se IT features to reduce the differentiation advantage of companies. -se IT features to focus products and services at selected marketniches

Innovate

reate new products and services that include IT components. 'evelop uni)ue new markets or market niches with the help of IT. /ake radical changes to business processes with IT that dramaticallycut costs, improve )uality, efficiency, or customer service, or shortentime to market.

Continue"..

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#romote Gro th -se IT to manage regional and global business e*pansion. -se IT to diversify and integrate into other products and services.

Develop Alliances -se IT to create virtual organizations of business partners. 'evelop interenterprise information systems linked by the internet ande*tranets that support strategic business relationship with customers,

suppliers, subcontractors, and others.

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Building a customer Focused Business

This strategy focus on Customer value recognizes that )uality, rather

than price, has become the primary determinant in a customersperception of value. ompanies that consistently offer the best valuefrom the customers perspective are those that keep track of theircustomers individual preferences, keep up with market trends, supplyproducts, services, and information anytime, anywhere, and providecustomer services tailored to individual needs.

Internet technologies can make customers the focal point of customerrelationship management 0 1/2 and other e&business applications.

1/ systems and internet, intranet, and e*tranet websites create newchannels for interactive communications within a company, with

customer.