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Pace 30

Strategic-Information Systems: A Formula for Success

In this, the first
of five columnš
on strategic sys-
tems, James
Martin de-
scribes how a
corporation can
use informa:
tilon-systems
technology to
nn gatn a competi-
tive advantage.
bari Ši Ai dota di in recent
M ARTIN years, there have
4 been many ex-
amples of one
Corporation pulling ahead by making
better use of information technolo Ogy
than its competitors. At the same time,
there have been some corporations that
have watched their earnings decline
(sometimes to the edge of bankruptey)
because their competition used comput:-
ers, microelectronics, intercorporate net-
works or information i in new competi-
tive thrusts. One of the most important
guestions in corporate computing is,
how can we use information technology
to gain a competitive advantage?

Systems that enable a corporation to
gain a direct advantage over its compe-
tition are called strategic systems. Some
of these are on-line systems that directly
enable the corporation to accomplish a
mission, and are referred to as mission-
critical systems.

Examples of mission-critical systems
are an airline operating a network of
terminals in travel agents' offices and a
distributor using on-line computers in.
its customer locations.

A mission-critical system operates at
the heart of the business, performing vi-
tal corporate and intercorporate func-
tions. If the system stops, those aspects
of the business stop. A strategic system
is thus critical to the functioning of the
business rather than a back-room, pa-
perwork-processing system, as most
commercial computers are.

As shown in the figure, strategic-sys-
tems opportunities include on-line links
to customers, agents, distributors, retail-
ers and suppliers, as well as software in
customer locations, new products, auto-
mated fabrication, service innovations,
strategic alliances and so on.

Corporate presidents are strongly con-
cerned with how their organizations can
do better than the competition or how
they can prevent the competition from
taking business away from their organi-
zations. They need to regard the com-
puter and information system as critical
weapons in their battles with competi-
tion. Some corporate presidents do not.
have this vision yet. They still regar
computers as an overhead cost that
should be minimized whenever possible.
One president of a large corporation in
Manhattan told me, "Tm an enemy of
computers in this place. All | want to
know about them is how much they
cost—and it's too much." At the same
time, his competition was devising in-
ventive ways of using information tech-
poe anno kemo O O

PG WEEKNAPPLICATION DEVELOPMENT

DPPLJED INTELLIGENCE (V

in which information systems can en-
hance the competitive position of a cor-
poration.

Rigorous business-planning methodolo-
gies—the analysis of goals and prob-
lems, technology-impact analysis and
critical-success-factor analysis—should
be used, but strategic-systems vision is
perhaps the most important; technigue
for top-level planning. The habit of
thinking about how technology can
change (or radically transform) the en:
terprise to make it. more competitive
needs to start at the top and pervade
the entire enterprise. End users with In-
formation Center tools need to be en-

For corporate

Federal Express was once a small up-

start confronted with numerous compet:

ing airfreight companies. Benetton in It-
aly was, in the early 1970s, a small fam-
ily business in a no-growth industry
with tough, old, established large firms.

Reuters, in the 1850s, used the tech-
nology of carrier pigeons to distribute
news and details of transactions on the
Brussels stock exchange faster than its
competition. In the 19705, it again out-
did its competition by providing finan-
cial information on terminal screens
with its worldwide news network, and
then enabling its customers to make
trades over that network.

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Svaka
a nd

, the com po m information

systems are weapons in their battles
to do better than their competitors.

couraged to explore how they can use

'computing strategically.

Many highly competitive corporations
are successfully employing new technol-

—ogy to create a major innovative busi-

ness thrust. Some of these companies
were old, established corporations that
changed their methods of operating.
Some were new corporations that, used
technology in an innovative way to
grow rapidly. Some fundamentally
changed a basic link in the industry
chain, as when American Airlines put

travel 9 agenta on-line to its computer

Ezpi were David and Gollath situation
where a small company
ana wi tehnolog.

als into clinics. Some

malo: bed z La RADE —- mni pe promo Nela E

A preemptive strike, as it's used in
this context, describes a corporation
making a thrust that establishes an ad-
vantage that cannot be dislodged by its
competition. When American and Unit:
ed Airlines established terminals (and
later, on-line PCs) in travel agents' of:
fices, other airlines were left out in the
cold.

American Hospital Supply similarly
preempted its competition. Its terminals
were attractive to clinics and hospitals,
and usually were not dislodged by com-
petition once they were in place.
Charles Wiseman, in his book "Strategy
and Computers," guotes industry execu-

5 vol sa mina fba American Hospital

| sponsible for driving competitors li ike A i

yo sie žni mi. zuni! Pe njim «A.

a | " ši

NOVEMBER 28, 1988

S. Aloe Co. and Will Ross Inc. from the
hospital-supply distribution business.
Once a hospital got an ASAP terminal,
American Hospital Supply couldn't be
budged." |
The examples discussed here relate to |

large corporations (although some were ||
small when the strategic decisions were
initiated). Strategic systems vision is
highly relevant to small corporations, as
well, and there are numerous examples.
of small-scale strategic thrusts. Some |
small accounting firms, for example, |
with less than a hundred customers, re- |
alized in the 1980s that they could intro-
duce personal computer packages to

their customers and grow their client
base rapidly. Their competition that did
not. move in this direction lost clients.

An analysis of strategic opportunities
may make it clear that a corporation re-
guires technology that it does not. pos-
sess. It may need to buy a corporation
that does have that: technology. Some
strategies have been to make acguisi-
tions. In the late 1970s, Dun £ Brad-
street searched for appropriate takeover
candidates to acguire both information
and technology that would further its
strategic vision.

Acguisitions

The firm purchased National CSS
(NCSS), a leading time-sharing company
with the innovative fourth-generation
language (NOMAD) and a nationwide
time-sharing network. Next, itpur- ||
chased McCormick and Dodge, oneof£ ||. RI
the ie software a miti MO LJ,

consumer-research O ETUN nin 8
Bradstreet also purchased several televi:
sion stations and cable television sys-
tems. Later it refined the facilities it
needed to help meet; its mission by sell-
ing its television stations and systems
and selling the NOMAD language (which
by then looked somewhat, old-fash-
ioned). This process of acguiring and
selling facilities can adjust, a corpora-
tion's resources to help it. meet its stra-
tegic vision.

To succeed fully in an era of rapidly
changing technology, a corporation
needs to understand the technology and
to develop a strategic vision of how it
can use technology to achieve something
better than its competition. It may plan
a preemptive strike against its competi-
tion. The strategic vision should be bold
and clear. To implement it, systems may
be created in-house, acguired externally,
or acguisitions or mergers may be
planned.

Next week, well look at the ma—
risks involved in the Pera o peni of
strategic-information s

The James Martin Productivity Series,
an tnformation service updated guar-
terly, is available through High Pro-
ductivity Software Inc., of Marble- <—
head, Mass. (617) 639.1958. For infor- —
mation on Poni, po contact se eo |
nology Transfer h

Santa Monica, Calif. 90102 (218) 904. ČL
8305. In Europe, contact Savant, 2?
New St, Carnforth, Lancs., LA5 9BX
Muied Kingdom ( (ari? 734 505.

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