Impact of Strategic Information Systems in Abu Dhabi

What Strategy is all about?

Many authors have quite different interpretations as to what strategy is all about. Andrews (1980) who coined the terms ‘strategy formulation’ and ‘corporate strategy’, considers that strategy mainly is about strategy formulation and corporate strategy (organisation-wide). And to Porter (1985) strategy broadly consists of ‘corporate strategy’ and ‘competitive strategy’ and it is critical for managers in modern organisations operating in increasingly market-based economies today to effectively formulate both corporate strategy and competitive strategy.

Porter (1996), in his influential article, argues that strategy is essentially about a firm’s choice and about deliberately and intentionally choosing to be different from other firms. Strategy means doing different things and doing it differently. Similarly, Barney (2002) asserts that, to managers operating in today’s market economies strategy is about the creation of ‘sustainable competitive advantages’. And according to Normann and Ramirez (1993) strategy is about creating ‘strategic value’.

Major Roles of Strategy

There are three major critical roles of strategy in today’s organisations; and these are Grant (2002):

Strategy as a target

Strategy as decision support

Strategy as a process of coordination and communication.

Characteristics of Strategy

From the above discussion it appears that strategy, whether in the public sector or private sector, has the following key characteristics:

Long-term

Organisation-wide

Involves significant commitments and resources.

Together these significant characteristics indicate that strategy and the management of it is critical for today’s organisations and its managers.

Strategic, Administrative, and Operational Management

The above mentioned characteristics of strategy indicate that strategic management is quite different and distinct from the other kinds of management, administrative and operational. Ansoff (1968) calls them as strategic, administrative, and operational management.

‘Strategic Management’ deals with the broad long-term future of an organisation and the possible ways for it to develop and implement strategies to prepare for change and manage change effectively (ibid).

‘Administrative Management’ is concerned with structuring an organisation’s resources and its activities to create successful organisational performance and involves allocating and scheduling an organisation’s resources and activities to support as well as facilitate the organisation’s strategy (ibid).

‘Operational Management’ deals with the smooth running of the organisation’s day-to-day activities (ibid).

Nonetheless all these aspects of strategic, administrative, and operational management are interrelated between each other. In other words strategic, administrative, and operational management are in nature interdisciplinary (Barney, 2002). Yet the scope of strategic management is much wider than both administrative and operational management (Fitzroy & Hulbert, 2005). In consequence it is imperative for managers to recognise this and operate accordingly in order to develop and pursue a holistic strategic approach to their organisations to obtain successful organisational performance (ibid).

Creating a Successful Strategy

Managers make strategic decisions in the present yet the effect of those strategic decisions is in the future. As a result it is impossible to determine in the present whether a strategy is successful or not before the outcome happens. However, Grant (2002) suggests a useful framework which shows the links between the most common elements that are found in successful strategies. See Figure 1 below:

Figure 1: Common Elements in Successful Strategies

(Source: Grant (2002)

The purpose of long-term objectives is to achieve the strategic intent of the enterprise (Grant, 2002). In order to do this it is vital for the organisation to assess and obtain a profound knowledge and understanding of its internal and external environments (ibid). Further a clear and objective appraisal of resources needed must be carried out before committing them to strategic plans (ibid).

In order to realise the objectives of a strategy managers should ensure that these elements are implemented effectively in their organisation (ibid). And to successfully implement strategies managers must identify and evaluate the required changes in their organisational processes, organisation culture, and organisational structure (Mathur & Kenyon, 1997).

Competitive Strategy

The major objective of competitive strategy is to create competitive advantage in the industry in which the firm is operating and the competitive strategy determines how the firm will compete (Porter, 1985). Researchers and the organisations, in both the public and private sectors, have written on SIS theory by adopting Porter’s (1985) competitive strategy framework. According to Porter the ‘Five forces’ that make up the industry structure determine the organisational performance of the individual firms that make up the industry. In Porter’s ‘positioning strategy’ the strategic position chosen by the firm is usually across the path of cost leadership and differentiation (ibid; Turban, King, and Lang, 2010).can select have a choice of four generic strategies available to achieve better organisational performance:

“Cost leadership,

Differentiation,

Cost focus, and

Focussed differentiation”.

Although absolute differentiation does not exist within the public sector organisations yet the operations of the public sector organisations can be divided into a series of organisational activities (for e.g. in Abu Dhabi: Abu Dhabi Water & Electricity Company (ADWEC), General Directorate of Abu Dhabi Police (ADP), Abu Dhabi Customs Administration, etc). In consequence competitive advantage accrues out of the unique ways in which a firm organises and performs its activities.

Achieving sustained competitive advantage in any competitive environment, according to Porter, results from being the lowest-cost producer of the product/service or by successfully differentiating it from those of its competitors in terms of ‘value’. The business processes which a firm carries out and the activities it performs result in creating value for its customers (Porter & Millar, 1985). In Porter and Millar’s view, to achieve competitive advantage over its competitors, a firm must either create better value to its customers and perform its activities relatively more efficiently than its competitors (lowest cost); or perform its activities in a distinct and unique way which creates greater value to buyers and commands a premium price (differentiation). And in order to improve their existing business processes to enhance organisational performance, organisations make investments in IT for enabling efficient, low cost operations, cost control in the organisation’s value-creation activities (Miller, 1988).

Strategic Information Systems

The strategic use of information systems by firms for obtaining competitive advantage was first strongly posited by Porter and Millar (1985). And since the work of Porter and Millar, many researchers have asserted that the strategic use of IS by a firm can generally lead to gaining competitive advantage or reducing a competitive advantage of the firm’s competitors (Wiseman, 1985; Porter & Millar, 1985, Porter, 1996; Turban et al 2010).

Definitions

Strategic Information Systems (SIS) is the application of Information systems, “used to support and shape an organization’s competitive strategy” (Wiseman, 1985, in Cavaye & Cragg 1993, p.126). According to Reponen (1993, cited in Turunen & Kämäräinen, 1999), “Strategic Information Systems are information systems which are designed to bring competitive advantage or have resulted in a competitive edge”. A more recent definition of Strategic Information Systems is given by Hemmatfar, Salehi, and Bayat (2010, p.160). They define a Strategic Information System as, “the information system to support or change enterprise’s strategy” (ibid).