Pace 36

amples of one
corporation pulling ahead by making
better use of information technology
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 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-
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. |

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-
erned with how their organizations can
lo better than the competition or how
hey can prevent the competition from
aking business away from their organi-
ations. They need to regard the com-
Juter and information system as critical
veapons in their battles with competi-
ion. Some corporate presidents do not
lave this vision yet. They still regard
'ormputers as an overhead cost that,
ihould be minimized whenever possible.
Jne president of a large corporation in
Manhattan told me, "Im an enemy of
somputers in this place. All I want to
know about them is how much they
jost—and it's too much." At the same
ime, his competition was devising in-
rentive ways of using information tech-
lology to capture a major part of his
Jusiness.

The phrase "strategic-systems vision"
imply describes the ability to see ways

In this, the first

|
Strategic-Information Systems: A Formula for Success

in which information systems can en-
Hance the competitive position of a cor-

o/ five columns poration.
on strategic sys- Rigorous business-planning methodolo-
tems, James gies—the analysis of goals and prob-
Martin de: lems, technology-impact analysis and
scribes how a eritical-success-factor analysis —should
corporation can | be used, but strategic systems vision is
use informa: perhaps the most important technigue
tion-systems for top-level planning. The habit of
technology to about how technology can
gain a competi change (or radically transform) the en-
tive advantage. 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-

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 18505, 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.

For corporate executives, the computer and information
systems are critical 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 agents on-line to its computer
center or American Hospital Supply put
order-entry terminals into clinics, Some
were David and Goliath situations
where a small company challenged the
giants with technology.

o "omlioa z tomo

: Je ki, Ne

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-
tives as saying the American Hospital
Supply ASAP system was "largely re-
sponsible for driving competitors like A.

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 smal£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. cljents.

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, it pur-
chased McCormick and Dodge, one of
the largest software companies, with
strong financial packages. It merged
with A.C. Nielsen, America's leading
consumer-research organization. Dun £

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
ehanging 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, we'l look at the business
risks involved in the development of
strategic-information systems. B

The James Martin Productivity Series,
an information service updated guar-
terly, is available through High Pro-
ductivity Software Inc., of Marble-
head, Mass. (617) 639-1958. For infor-
mažion on seminars, please contact (in
the United. States and Canada) Tech:
nology Transfer Institute, 741 10th St.
Santa Monica, Calif. 90402 (213) 394-
8305. In Europe, contact Savant, 2
New St., Carnforth, Lancs., LA5 9BX
United Kingdom (0524) 73% 505.

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