DECEMBER 5, 1988 MARTIN different way. They are innovative in the sense that an entrepreneur is innovative. Not all business innovations succeed, just as not all entrepreneurial startups succeed. And some strategic systems have failed. Federal Express, for example, reaped great benefits from the innovations that led to its basic business, but it failed when it attempted to innovate ZapMail. ZapMail was a system for using elec- tronic transmission combined with the Federal Express computer-controlled de- livery fleet for delivering documents in an hour or so. The strategic thrust that ZapMail represented was a very expen- sive failure. If the American Airlines Sabre system for travel agents had failed, that would have been disastrous for American Air- lines. American spent $350 million to build the system. It was taking a major business risk in the same way a startup company takes a business risk. But the payoff justified the risk handsomely. Because a strategic information sys- tem is a business risk, the decision to build it cannot be taken by an informa- 'sion must come irom. The strategic vision may be initiated by a computer executive or chief informa- tion officer, but. that vision must be passed to top management, who will re- fine it and take action. The use of new technology to create an innovative business thrust. was sum- marized in last week's column. Some of £hese examples represented sweeping zhanges in the businesses discussed and esulted in a new mode of operations or their industry. Most examples of trategic systems are less dramatic but f major importance to the corporation 1 guestion. Charles Wiseman, in his book "Strate- y and Computers," classifies strategic hrusts into five categories: differentia- lon, cost, innovation, growth and alli- nce. For each of these, the thrusts can be ither offensive or defensive. There is hus a matrix of possibilities, as the ac- ompanying figure shows. In the first case of differentiation, a orporation can move to differentiate its roduct or services from those of its ompetition. The move to make a prod- let stand out from its competition is an ffensive strategy. A defensive strategy s designed to improve the product to educe the differentiation achieved by ompeting products. As (or the cost, thrust, there are many ypes of thrusts to reduce the cost of a roduct. A company may also manipu- Developing a 4n this, the sec- ond of five col- umns on strate-. PC WEEK NAPPLICATION DEVELOPMENT ; Strategic Vision for Business late a variety of factors that would raise the costs of competition. With innovation, there should be a constant search for innovative ideas—to improve products, services, production technigues and so on. Innovation may bustness risks of | be used offensively to pre-empt competi- building strate- tion or defensively to lessen an advan- gic information tage the competition has. : systems. Growth may be geographical expan- Strategic sys- sion, expansion within an existing terri- tory, vertical expansion of a product line or diversification by adding new Strategic systems vision considers competition, technology, suppliers, customers, industry trends — Jactors that facilitate new, competitive thrusts. types of products. Growth may be done offensively, or it may be done to protect the sales from competing thrusts, In the alliance strategy, a corporation may buy or merge with another corpo- ration or form a strategic partnership in order to expand its market or make its product line more complete or more use- ful. This, again, may be an offensive strategy to pre-empt competition, or it may be defensive to lessen an advantage achieved by the competition, The technology that makes new stra- tegic thrusts possible is very different now from when Baron de Reuter or Bar- on de Rothsehild used carrier pigeons to gain a competitive advantage. Today the technology keeps changing, constantly opening up new possibilities. Types of technology that support an information Mn are listed in the accompanying Pace 35 concerned with competition, technology, suppliers, customers, industry trends and, in general, factors that facilitate new, competitive thrusts, Rather than use a planning method which excludes these factors, it is desirable to specifical- ly focus on them. In general, it is desir- able strategically to focus on how the enterprise might be changed, rather than to solely examine and model what exists today. Wiseman observes that the use of computers in corporations evolved from traditional data-processing (MIS) sys- tems to management-support systems (MSS) and now needs to evolve to stra- tegic information systems (SIS). Tradi- tional data processing systems processed predefined transactions to produce predefined results. They included pay- roll, invoicing, purchasing, inventory control, accounts payable, accounts re- ceivable and so on. Management-support systems were designed to satisfy the in- formation needs of managers and assist, in the decision-making process. They provided guery facilities, "what-if" capa- bilities, spreadsheets and decision-sup- port tools. Wiseman says that many traditional data-processing veterans resisted the emergence of MSS, refusing to admit their existence. Others argued that they were merely extensions of existing MIS systems. Similarly, many of today's sys- tems planners are ignoring strategic-in- formation systems and concentrating solely on the functions of today's enter- prise. MSS systems were often built by peo- ple who differed culturally from those who built; traditional MIS systems. MIS developers learned to observe what was happening, to draw charts of it and to design systems to replace existing proce- dures. MSS developers, on the other hand, had to satisfy information needs of managers and professionals, which were not observable and not. expressed with precision. Some MSS systems were built by end users or planning staff in an information-center environment. Wiseman suggests that strategic-infor- mation systems should be conceived and designed by a different group in a cor- poration than that which designs MIS or MSS. Strategic-information systems are not designed by observing existing func- tions but by inventing new funetions. They reguire a different type of creativ- ity and business acumen. People good at. conceiving SIS differ culturally from most of the people who design tradition- al MIS or MSS. Once specified, SIS might be constructed by the professionals who construct other systems. Next week, we'l look at strategic ap- plications of personal computers. One of the dangers of most method- ologies used for strategic planning is that they tend to prevent their users from seeing the -systems oppor- tunities. The reason is that they are con- cerned with automating today's corpo- rate functions. Strategic-systems vision is concerned with changing the corpo- rate functions or building new activities in the corporation. Many strategic planning methodolo- gies are derived from IBMs Business Systems Planning (BSP). Methodologies "an Witchonke: with different names that are used by large consulting or accounting firms are often variants on BSP. The ideas of BSP have been taught in various forms in thousands of IBM training classes and are the basis of various IBM guides on Systems Planning. IBM's BSP manual states that, its objective is "to provide an information systems plan that supports the business's short. and long-term in- formation needs and is integral with the business plan." BSP defines "environment" as those things that lie outside the scope of the planning study: the economy, govern: ment regulations, labor, consumerism, competition, industry position, industry trends, suppliers and technology. The BSP manuals instruct planners to ignore these environmental factors when con- ducting the BSP study. Strategic systems vision is very much 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- mation 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) 734 505.