Реферат: Strategic Information Systems Essay Research Paper The

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Transaction cost economics explains the cooperative relationship among enterprises. It sees them as attempts to increase the utilisation of fixed resources, such as productive capacity, managerial capability, and technological know-how, through closer integration of decisions, and hence improved coordination among economic activities that are not jointly owned: economies of scope and scale enable transaction costs to be reduced. Transaction costs consists of coordination costs and transaction risks. Coordination costs are the costs of coordinating decisions and operations among economic activities, in order to improve resource efficiency. This includes costs to establish and operate information channels and decision processes.

Transaction risk is the possibility of opportunistic behaviour by a party to the relationship leading to uncertainty surrounding the level and division of the benefits from the increased integration of decisions and operations. Transaction risk can be divided into three sub-categories:

? transaction-specific capital;

? information asymmetries; and

? loss of resource control.

Traditional transaction-cost theory assumes that increasing explicit coordination requires specialised sunk investments to decrease coordination costs, but that the sunk nature of these investments substantially increases transaction risk.

The application of IT tends to reduce the coordination costs by reducing the costs of accumulating, storing, and communicating information. It is necessary, however, to to mitigate transaction risk as well, e.g. through modularity and replicability of knowledge, open standards, intuitive user interfaces, and interconnection among networks. However, codified information is much easier to duplicate and transfer without any security measures.

IT-facilitated cooperation among enterprises generally takes one of the following forms:

? vertical quasi-integration, whereby existing relationships with customers and suppliers can become more tightly coupled;

? outsourcing, whereby activities previously performed within one enterprise due to high transaction risk may be shifted to third-party providers, in order to benefit from the higher production economics, such as scale and specialisation, of those providers; and

? quasi-diversification, whereby enterprises cooperate across markets or across industries in order to leverage their key resources in new areas, exploiting increased economics of scale and scope in those resources. Relationships with other firms that were previously not possible due to high coordination costs or high transaction risk may become feasible.

Scott Morton (1991) proposes that the scope for cooperation is determined by two factors: the degree of inter-relatedness between its production process and that of its suppliers and customers; and exploitability, by which is meant the extent to which the advantage is sustainable rather than contestable. Different industrial structures according are classified according to their inter-relatedness and exploitability, as in Exhibit 10.

The potential for competitive and cooperative behaviour is dependent on the industry’s position in the scheme. The higher the exploitability and the higher the inter-relatedness of an industry, the greater the scope for competitive SIS. On the other hand, the lower the interrelatedness and the lower the exploitability, the greater the likelihood of co-operative SIS.

A more substantial degree of cooperation is possible. There are circumstances in which the whole of an industry may suspend competition in respect of some aspect of its operations, and pursue a joint strategy of collaboration. Typical examples are the adoption of standards (such as the dimensions and functional characteristics of interfaces between products, or common messaging systems) and of common infrastructure (such as transport containers and network services providers).

Collaboration may be in the interests of the customers, in that it may result in lower costs, higher quality or greater reliability; and of suppliers, in that it may lead to a reduction in the variability of their customers’ demands. It can, of course, be detrimental to the interests of suppliers and/or customers, to the extent that it enables the set of enterprises to exercise market power, or to raise barriers to entry, thereby defend against the entrance of new competitors and hence to permit the emergence of a slothful oligopoly. This requires sufficiently different treatment, that it is deferred until a later section.

Exhibit 10: Scott Morton’s Industrial Structure Classification

(Scott-Morton, 1991)

The Discovery or Invention of Strategic IS

The earlier parts of this paper have focussed on the origins and nature of strategic information systems. This section draws together normative proposals put forward by a variety of authors regarding the way in which organisations can bring strategic information systems into existence, or otherwise exploit IT to achieve competitive advantage.

Porter’s 1980 and 1985 books proposed that the enterprise’s value chain can be used as a framework for identifying opportunities for competitive advantage. A firm’s value activities fall into two broad categories: primary and support. Primary activities are those involved in the physical creation of the product, its marketing and delivery to customers, and its support and servicing after sale. Support activities provide the infrastructure whereby the primary activities can take place. These are linked together to form the enterprise’s value chain.

Competitive advantage in either cost or differentiation is a function of this chain. IT is spreading through the value chain, transforming the way value activities are performed and the nature of the linkages among them. It enables an enterprise to better coordinate its activities and thus gives it greater flexibility in deciding its breadth of activities.

Benjamin et al (1984) proposed a strategic opportunities matrix for identifying IT opportunities. They suggested that IT can be used for strategic purposes not only in the marketplace, but also in internal operations. They claimed that most models overlooked the potential strategic impact of applying IT to traditional products and processes, or to changing the firm’s current way of doing business. The techniques associated with environmental scanning (Aguilar 1967) can be applied to this process.

Porter and Millar (1985) then proposed the use of an information intensity matrix to assess IT’s role. The matrix evaluates the information intensity of the value chain against that of the product. They suggested that IT will play a strategic role in an industry that is characterised by high information intensity in both the value chain and the product. Their representation of the matrix is reproduced in Exhibit 11.

Wiseman (1988) broadened the scope of Porter’s model. For Wiseman, competitive advantage is “The dominance of one competitor over another or others in an arena, with factors conducive to its success over a period of time”. An organisation’s competitive space generally comprises many different arenas, which may be independent or linked. The organisation may possess multiple competitive advantages or disadvantages within or among its arenas.

Wiseman combined his generic strategies with Chandler’s growth strategies to produce a ’strategic thrusts’ framework intended as a means of identifying strategic IS. Strategic thrusts are major competitive moves made by a firm. Five are postulated: