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Strategy Implementation can always be moulded if concrete sources point to to take a detour. The entire strategy of a company cannot be altered merely on the basis of information received. But amendments can always be made to ensure that the company exceeds it's annual targets.
The importance of the information revolution in not in dispute. The question is not whether IT will have significant impact on a company's competitive position; rather the question is when and how this impact will strike. Companies that anticipate the power of IT will be in control of events. Companies that do not will be forced to accept changes that others initiate and will find themselves ar a competitive disadvantage. The following five steps will help you to take advantage of opportunities that the information technology has created.
1. Assess information intensity
Evaluate the existing and potential information intensity of the products and processes of your business units. It is very likely that IT will play a strategic role in an industry that is characterized by one or more of the following features:
- Potentially high information intensity in the value chain – a large number of suppliers or customers with whom the company deals directly, a product requiring a large quantity of information in selling, a product line with many distinct product varieties, a product composed of many parts, a large number of steps in a company's manufacturing process, a long cycle time from the initial order to the delivered product.
- Potentially high information intensity in the product – a product that mainly provides information, a product whose operation involves substantial information processing, a product whose use requires the buyer to process a lot of information, a product requiring especially high costs for buyer training, a product that has many alternative uses or is sold to a buyer with high information intensity in his or her own business.
These may help identify priority business units for investment in IT. When selecting priority areas, remember the breadth of IT – it involves more than simple computing.
2. Determine the role of IT in industry structure
Managers should predict the likely impact of IT on their industry's structure. They must examine how IT might affect each of the five competitive forces. Not only is each force likely to change but industry boundaries may change as well. Chances are that a new definition of the industry may be necessary. A company should understand how structural change is forcing it to respond and look for ways to lead change in the industry.
3. Identify and rank the ways in which IT might create competitive advantage.
The starting assumption must be that the technology is likely to affect every activity in the value chain. Equally important is the possibility that new linkages among activities are being made possible. By taking a careful look, managers can identify the value activities that are likely to be most affected in terms of cost and differentiation. Obviously, activities that represent a large portion of cost or that are critical to differentiation bear closest scrutiny, particularly if they have a significant information-processing component. Activities with important links to other activities inside and outside the company are also critical. Executives must examine such activities for ways in which IT can create sustainable competitive advantage.
In addition to taking a hard look at its value chain, a company should consider hoe IT might allow a change in competitive scope. Can IT help the company serve new segments? Will the flexibility of IT allow broad-line competitors to invade areas that were once the province of niche competitors? Will IT provide the leverage to expand the business globally? Can managers harness IT to exploit interrelationships with other industries? Or, can the technology help a company create competitive advantage by narrowing its scope?
A fresh look at the company's product may also be in order. Can the company bundle more information with the product? Can the company embed IT in it?
4. Investigate how IT might spawn new businesses.
Managers should consider opportunities to create new businesses from existing ones. IT is an increasingly important avenue for corporate diversification. Identifying opportunities to spawn new business requires answering question as: What information generated (or potentially generated) in the business could the company sell? What information-processing capacity exists internally to start a new business? Does IT make it feasible to produce new items related to the company's product?
5. Develop a plan for taking advantage of IT.
The previous steps should lead to an action plan to capitalize on the information revolution. This action plan should rank the strategic investments necessary in hardware and software, and in new product development activities that reflect the increasing information content in products. Organizational changes that reflect the role that the technology plays in linking activities inside and outside the company are likely to be necessary.
Increasingly, companies must employ IT with a sophisticated understanding of the requirements for competitive advantage. Organizations need to distribute the responsibility for systems development more widely in the organization. At the same time, general managers must be involved to ensure that cross-functional linkages, more possible to achieve with IT, are exploited.
These changes do not mean that a central IT function should play an insignificant role. Rather than control IT, however, an IS manager should coordinate the architecture and standards of the many applications throughout the organization, as well as provide assistance and coaching in systems development. Unless the numerous applications of IT inside a company are compatible with each other, many benefits may be lost.
IT can help in the strategy implementation process. Reporting systems can track progress toward milestones and success factors. By using information systems, companies can measure their activities more precisely and help motivate managers to implement strategies successfully.
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