Understanding Strategic Information System
A strategic information system is mainly developed to respond to the corporate world and many business initiatives. Strategic information is used for gaining competitive advantage and formulating business strategies by organizations. It may deliver a service or product that is at a lower price, differentiated and mainly concentrates on a demanding market section, or which is innovative. It help companies frame business strategy, competitive strategy, take management decisions and thus gain competitive advantage and achieve cost reduction.
Information System Strategy is an essential feature in Corporate and Information Technology (IT) world and provide them with better bargaining power. In a nutshell, it helps firms and companies to allocate, store, process data, move the data and information they develop and receive. It also enables and provides various tools and services for aiding the firms to apply metrics and analytical tools in their information repositories. Information systems allow them to recognize the resourceful opportunities for expansion and simple ways to enhance operations and supply efficiency. Thus firms with a better chain management, knowledge management, data management practices along with more effective data presentation and analysis can provide better customer service at reduced or less cost.
Importance and advantages of Strategic information system
Strategic information system provides a connection between demands of organization and latest information technology. This tactic helps an organization to get hold of the market by utilizing Information tech to meet its challenging requirements to the continuous variation in the corporate environment. Helps them evolve their business strategy, helps with knowledge management and operations management.
Information system strategy is a critical aspect of an organization’s management decision for its growth, expansion and supply chain management. Information technology and competitive intelligence can work wonders for a business. The integration of the data system and its function within the organization can be handled easily by enabling open access and use of management systems. Besides that, it also enables the classification of different opportunities for the use of information systems for different strategies. It gives the surety that only useful resources or the use of resources which are less are allocated to the applications and to use the scarce resources in a sustainable way and have a better impact factor. With the System Information Strategy, it ensures that the Information system functions accordingly and supports the business goals and objectives of the organization at the different levels.
There are several instances of strategic planning which have helped the organizations to help create and sustain the resources in this competitive market over the past years and has allocated several effective benefits and simply continued to provide for the survival of these organizations which have used these systems. These systems are often termed as ‘strategic concepts of the organization.’ To give the maximum performance of the firms financially in a fluctuating market, the correlation between Strategic Management and Information System is significant fundamentally. Understanding of management information system is equally helpful & an asset to the organisation.
In additional to the reduction in product related cost, it also helps in increasing market share, streamline business process, provide a better business environment, diversify functional areas, and deliver high quality product and services.
Types of Information System Strategies
1. Operations support system: In a firm, data execution is performed by the user end, which is later processed to generate useful data products and services like reports, which are utilized by different users. Such a strategy is called Operation Support. The primary purpose of this system is to keep a check on transactions, operations, control, supply chain, and supply management. It also helps to facilitate internal and external talks, product differentiation and it updates the central main database of the organization. The operation support system is further divided into three systems which are:
- Transaction Processing System (TPS)
- Process Control System
- Enterprise Collaboration System
2. Management Support System
Firms require accurate data in a specific format to understand the decisions of the organizations. Management support system strategy enables the effective decision and task operation process more manageable for the managers. They are essentially divided into a different strategy like management, decision, accounting and expert information system.
These systems facilitate and provide precise information and data to the manager for easy routines, decision-making processes. Decision support system which helps to solve particular issues related problems. Strategic planning, information technology, information management and data collection can aid the process of data analysis.
Uses of Strategic Information System
- Creating Hurdles for the Entry of a Competitor: In this, a firm uses information systems to supply products and services that are hard to duplicate or that are used primarily to aid highly specialized networks of business. This strategy stops the entry of competitors in the market as they find the cost of giving such services at a very high price.
- Improving Marketing by Generating Database: Information system also gives the firms and organization an edge over their competition by generating stronger databases, utilising big data and product differentiation to enhance their sales and marketing tactics. It treats existing information as a useful resource. For instance, a business firm may use its updated databases to monitor the purchase of the customers and to locate many segments of the market.
- Locking customers and suppliers.: It is an essential way of getting the advantage of competition by making the customers and suppliers permanent. In this information systems strategy are implemented to provide benefits to the customer and the suppliers so that it may change their mind and it becomes hard for them to switch over to the other competitor so that they continue to provide the services.
- Lowering the costs of the products: It may help the firms lower their costs and allowing them to give products and services at a much smaller cost than their competitors. Thus such a strategy can provide the expansion and growth of the firm.
- Leveraging technology in the value chain: In this way, the organizations pinpoint the particular activities in the business, where competitive market strategies can be applied and where the strategical information systems can be more effective.
Before making a new system, the strategy is very essential for smooth business operations and services. First of all, the firm should identify their requirements and then work on strategic analysis and SWOT analysis. Development of new information system should be in response to the needs and requirements; whether at the level of executing transactions or at some complex data and support information system levels. The normalization of requirements, information management, goals, and authorization of the information system should be done first. These systems include financial measures that focus mainly on the short period consequences of manager’s decisions regarding queries such as revenue expansion, market inflation, asset utilization, resource management and cash flow in the fluctuating market. They boost up the objectives of the firm with nonfinancial measures that helps with operational achievements to raise the future financial growth of the organization. The system strategy development should mainly identify the project resources and constraints for every area of application. Necessary planning should be flexible to adjust the priorities of the organization.