MGMT 550

Information Technology and Information Technology

Ewan Sutherland Visiting Instructor

Course overview

Vice-President Gore has brought to prominence issues concerning the information society and what he calls the National and Global Information Infrastructures. These ideas have been reflected in policies in Europe, Japan and elsewhere. Information and information technology are now seen as important issues in economic productivity and competitiveness. The social implications of access to information and its absence have also been highlighted.

In the early 1980s Information Systems (IS) emerged from its surgically clean and isolated backrooms to become a strategic issue; the result of what were to prove inflated claims made for 'strategic information systems'. This highlighted the already evident problems encountered by senior executives in the management of information systems and the problems faced by the IS function in achieving strategic objectives.

Perhaps surprisingly, strategic management is a relatively recent phenomenon, dating only from the 1950s, thus, it is the same age as commercial data processing. Strategic management is still maturing, its hold over the business is far from complete, with some functions remaining relatively independent. Although IS has become part of the domain of strategic management, the tools for managing IS remain remarkably crude, especially when compared to the technology.

If, as has been claimed, the use of information systems yields competitive advantage, then analysis of examples should yield benefits on two levels:

  1. it should help other companies to find competitive benefits from the use of information systems;
  2. it should yield insights into the theory of strategic management.

Failure to deliver benefits for other companies would undermine the credibility of IS as an area of strategic initiative and might even remove it from consideration in strategic management. Given the rudimentary state of strategic management theory, it seems reasonable to expect insights into strategic management from the use of a tool such as IS; not least because of the claims made for its efficacy and the often dramatic changes its use makes to business.

The problem then is one of harnessing IS for strategic purposes, which implies some sort of organizational process. Much of the efforts over the last decade have emphasized planning of IS in a formal sense, rather than integration or increased organizational learning. Formal planning of the type frequently discussed in information systems is by no means obligatory in other areas of business.

Business strategists became interested in IS because:

Meanwhile, IS managers developed an interest in strategic management in order to:

It is impossible to ignore external stake-holders, the computer and telecommunications industries. They have grown on the back of ever-increasing sales, primarily to large corporations where data processing departments were also growing rapidly. The pattern of technological advances translated into commercial pressures and shorter product life cycles which drove vendors into an increasingly desperate push for business with which to generate the cashflow necessary to pay for the development of the next round of products. The computer and telecommunications industries are characterized by a frenetic search for anything which might help to sell new systems or to retain existing customers. The justification for sales in the 1960s and 1970s was savings in direct labor costs, but this could not be so easily applied to replacement systems in the 1980s, here the strategic justification was welcomed. It has been alleged that these industries are driving the political programmes for the information society.

The relationship between strategic management and information systems has been explored for over a decade. The progress has been rather disappointing, nonetheless, it is clear that the use of so-called strategic information systems fails to take organizations outside the rules of the competitive game. All the evidence reinforces those rules, bringing down on the heads of the unwitting, reminders of the consequences of failure in the marketplace. There are no prescriptions--no magic bullets, no snake oil--certainly none that work. The slow pace of advance in our understanding of the relationship between strategic management and information systems makes it questionable whether a theoretical basis will be discovered in the near future. We are left managing a highly sophisticated technology with little to guide us. This makes the subject particularly prone to flavour-of-the-month styles of management, whether outsourcing or BPR.

However, there is a powerful and growing array of tools which can be applied to the problems of building and integrating information systems. The improvements in prototyping, software engineering and so on are quite remarkable, while the growing market in systems integration and outsourcing make it plausible to buy-in the expertise required.

Tools for the strategic management of IS remain inadequate, indeed the problem is still poorly formulated. Crude solutions such as the handing down of a business strategy to the IS function simply cannot convey the real thinking behind the strategy and are often incompatible with the style of strategic management in the company. Moreover, implementation and formulation cannot be separated; somehow the implementation of strategic management policies in the IS function must be integrated into the overall strategic management process. The Strategic Alignment Process is a plausible framework, but it still leaves much to be filled in.

In most companies, the strategic management process is not contrived to produce an architectural plan for a long lasting infrastructure, it is much less specific than that. In the only area where it does, in the description of the organizational structure, nobody believes the resulting chart. While formal planning methods have taught senior executives much about IS and the management of IS, it has not achieved the levels of understanding or the commitment necessary for real success or integration. Part of the problem is that these analyses of needs have been driven from the bottom-up, with the IS function providing both the impetus and the methodology.

One measure of the extent to which IS has penetrated the world of strategic management would be to determine how many corporations would claim that they had a core competence in information systems. The answers seem likely to include only: airlines, banks and retailers.

It is important to remember the challenge by Prof Henry Mintzberg:

The field of management information systems, ostensibly concerned with application, continues to try to define itself by what a machine is claimed able to do (but never quite does, although no one dares to find out). [Henry Mintzberg, 1989, page 79.]

This course will provide you with the background, language, and confidence necessary to harness information technology to business strategy and to understand its implications for firm, industry, and society.

We will look at the management issues related to the organizational use of IT. We will consider the relationship between information, information technology, business strategy, and organizational design. Information technology will be seen as:

We will examine the role of information technology in efforts to re-engineer organizational processes and the redefinition of industry boundaries.