From OLTP to SAP

Ewan Sutherland

MGMT 550

On-Line Transaction Processing

• historic core of information systems
• originally with strict cost benefit analyses
• organisationally within the accounting function
• individual applications for different parts of the organisation
• accumulation of enormous amounts of data

The search for linkage

• how to couple information with business strategy?
• needs of strategists
• needs of IS managers

Business strategists

• were looking everywhere and anywhere for competitive advantage
• believed that high IS expenditure and performance low and poorly coupled to the organisation
• wanted to control proliferation of spending
• found IS a barrier to strategic moves

IS managers wanted to

• manage the complexity of their empires
• control the challenge of growing spending in the organisation
• plan and maintain IS and telecoms
• develop perception of IS as infrastructure
• needed input for formal planning methodologies
• overcome barriers to cost-benefit analysis
• respond to strategic moves by the organisation

Is the IS function really different?

• seemingly obsessive need for strategy
• more systematic than many “disciplines”
• yet, still an immature field
• isolation in the organisation
• not historically involved in strategy formulation

Vested interests in moving to SIS

• IS function
• corporate management
• consultants
• academics
• computer industry

Consultants

• intellectual mercenaries
• improve the performance of organisations
• identifying opportunities
• implementing opportunities

Role of academics

• clichés, case studies and simple recipes
• raised awareness
• increased importance in business-schools

• Pyburn (1983)
• Ives and Learmonth (1984)
• Porter and Millar (1985)
• Keen (1986)

Computer industry

• need to maintain growth of sales
• R&D costs
• ever shorter life-cycles

Porter and Millar

• recognition of the importance and ubiquity of information technology (in value chain)
• changes to industry structure
• creation of new business opportunities
• possibilities for competitive advantage (lower costs and improve differentiation)
• embedding technology in products

Information intensity matrix

Strategic Information Systems

• turned out to be a fashion
• not sustainable as competitive advantage
• often a "strategic necessity"
• "virtual value chains”" (HRB, Nov ‘95)

Examples -- clichés

• Merrill Lynch & Co (Cash Management Account)
• American Hospital Supplies
• Minitel
• American Airlines (SABRE)

Merrill Lynch & Co

• launched 1977
• partnership with Bank One
• combined banking and investment (credit card, cheque account and brokerage service)
• by 1983: 915,000 accounts, growing at 5,000 per week, managed assets of US$ 85 Bn, 70% market share
• pre-emptive strike at competitors

American Hospital Supplies

• so successful it became Baxter Helathcare
• partially responsible for the myth you could lock-in customers

Minitel

• French government scheme for the “informatisation” of society
• extremely French
• gave away six million terminals
• intended to replace paper directory
• infamous messagerie rose
• now clashing with Internet access

Diffusion

• high-levels of job-hopping
• stories in the technical press
• suppliers
• courses
• consultants

Information partnerships

• novel incentives for customers
• novel services
• joint marketing programmes
• new channels of distribution
• operational efficiencies

Information analysis

• integration of data became possible with databases and networking
• enormous data sets (e.g., retailing)
• who has skills in this sort of analysis?
• information about
  1. customers
  2. staff
  3. products

Position of information systems

Five levels of IT-induced reconfiguration

Options for Network Redesign

Management in The Nineties

... there has never been such a profound analysis of the ways in which IT can affect business performance for good or ill, nor such a complete prescription of the measures companies must adopt if they are to stay afloat in the uncharted waters of today’s fiercely-competitive global marketplace.
Alan Cane Financial Times 30.iv.1990

MIT90s view of IT infrastructure

• IT platform not isolated systems
• business transformation not technological sophistication
• business criteria not cost-benefit analyses
• business domain not IS domain
• strategic manager not IS manager
• strategy-IT alignment not IT for implementation

Framework for strategic alignment

Strategic alignment process

Research issues

• role of IT in corporate performance
• management of the IS function
• assessing the benefits of BPR from:
• information technology
• bureaucratic slack
• identification of the sources of innovation
• what does it tell us about strategic management?