builidi

DECEMBER 5, 1988

Systems.

Strategic sys-
tems often re-
guire a corpora:
tion to do busi-

ness in a
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
Jed 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.

1£ 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
payofi justified the risk handsomely.

Because a strategic information sys-
tem is a business risk, the decision to

cannot be taken by an informa- .
on niši Come from. E
'The strategic vision may be initiated by

a computer executive or chief informa-

fion 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
these examples represented sweeping

changes in the businesses discussed and
resulted in a new mode of operations
for their industry. Most examples of
strategic systems are less dramatic but:
of major importance to the corporation
in guestion.

Charles Wiseman, in his book "Strate-
gy and Computers," classifies strategic
thrusts into five categories: differentia-
tion, cost, innovation, growth and alli-
ance.

For each of these, the thrusts can be
either offensive or defensive. There is
thus a matrix of possibilities, as the ac-
companying figure shows.

In the first case of differentiation, a
corporation can move to differentiate its

product or services from those of its
competition. The move to make a prod-
uct stand out from its competition is an
ofTensive strategy. A defensive strategy
is designed to improve the product to
reduce the differentiation achieved by
competing products.

As [or the cost thrust, there are many
types of thrusts to reduce the cost of a
product. A company may also manipu-

MARTIN

PG WEEKNAPPLIGATION DEVELOPMENT

APPLIED INTELLIGENCE

k — Developing,a Strategic Vision

late a varjety 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
be used offensively to preempt competi-
tion or defensively to lessen an advan-
tage the competition has. :

"Growth may be geographical expan-
sion, expansion within an existing terri-
tory, vertical expansion of a product
line or diversification by adding new

One of the dangers of most method-
ologjes used for strategic planning is
that they tend to prevent their users
from seeing the strategic-systems oppor-
tunities. The reason is that they are con-
cerned with automating today's corpo-
rate funetions. 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

Strategic systems vision considers competition,
technology, suppliers, customer, industry trends—
factors 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 allance strategy, a corporation
may buy or merge with another corpo-
ratjon 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 Rothschild 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
strategy are listed in the accompanying
chart.

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

Pace 35

for BusinesS

concerned with competition, technology,
suppliers, customers, industry trends

y focus on them. In general, it is desir-
able strategičally
enterprise might be changed, rather
than to solely examine and model what
exists today.

to focus on how the

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 stafi 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 functions.
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'll look at strategic ap-
plications of personal computers. B
MG JET S RNI ER v so
'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, Lanes., LA5 9BX
United Kingdom (0524) 734 505.

A TA