The Information Systems Strategy Triangle

The importance for business strategy to drive organisational strategy and IS strategy, and what might happen if business strategy was not the driver:

The primary point in this chapter is that in any well-run organization, the business strategy drives the rest of the operational strategy, and information systems is no different. However, typically, managers seem to think that changing or upgrading an information system (or even a component of an information system) will only positively impact a business. Quite the opposite, in fact, is true. By making changes in organizational strategy or IT strategy first, the triangle is "out of balance" and there will be consequences in the affected areas.

For example, building a virtual organization, but not changing the business strategy to something like "insuring our people are productive and have the widest possible work place opportunities" can lead to significant disconnects between workers, their managers, and their customers. And, worse, without supplying the virtual worker with the appropriate information system (a computer at home, a laptop, etc) will lead to a decrease in productivity by the virtual worker, and a major disruption of business operations.

Considering a traditional manufacturing company that wanted to take advantage of the Internet and the Web, the reasonable business strategy is as follows, followed with the way organisational and IS strategy need to change:

A reasonable business strategy might be to provide what the customer wants when the customer wants it. The idea is to use the web as a mechanism to connect to customers, to take their orders, to provide services when the customer wants them and to link with suppliers and partners. To do that the organization would have to be organized around responsiveness, and would have to include elements of empowerment and authority. It would not work to have a centralized decision making authority if the organization wants to be responsive because it would take to long to get information up and decisions back to the field.

The manufacturing process might be organized around build-to-order rather than on market analysis and product histories, but then there would need to be a series of organizational processes and people that would be in place to make sure the manufacturing company is able to actually build the products when they are ordered. The IT strategy to support this business strategy would be one of rethinking the use of the web as a tool for delivering information to customers, suppliers and employees.

The meaning of this tip from Fast Company, “The job of the CIO is to provide organisational and strategic flexibility”:

The job of the CIO does not just narrow in on information systems (IS) or solely focus on developing IS strategy. Rather the CIO must work with top level executives and functional executives to insure that the IS strategy is aligned with the business and organizational strategy. A particular challenge for the CIO is to ensure that the IS architecture and infrastructure can support the business and organizational strategy. In making long-term decisions about IS architecture, the CIO must attempt to promote flexibility in the future with scalable architecture that meets the organization’s present and future needs.

* Source: Pearlson & Saunders (2006)