Strategic Information Management Third Edition Challenges and Strategies in Managing Information Systems by ROBERT D GALLIERS and Dorothy E Leidner_1 pot

Information Systems Strategy 29 Chapter 3, by Smits, van der Poel and Ribbers, is the closest we found to an article representing our view of information strategy, as depicted in Figure I.1 Our intention was to include a chapter which focused attention on the strategic information required to enable the implementation of business strategy, and which would provide strategists with information that would enable the questioning of assumptions on which that strategy was based This would include information from the business and technological environment, and feedback information concerned with the impact (both intended and unintended) of the strategy once implemented Smits and colleagues describe the information strategies of three major insurance companies in the Netherlands The chapter includes reflections on the various stakeholders involved in the IS process, and on aligning IT to business goals and processes A major finding, contrary to the above comment regarding necessary feedback information (and in our experience common to most organizations), was that none of the companies studied assess the effects of their information strategies at an organization-wide or business process level, and certainly not over time Chapter 4, by Karimi and Konsynski, focus attention on alternative structures associated with different global strategies and consider the need to align the information technology departmental structure with these alternatives in mind Useful illustrations are given from various, very different, parts of the world including, for example, Finland and Singapore, as well as North America Key issues associated with, for example, different regulatory environments and transborder data flows are highlighted A key point that this chapter makes relates to the kind of relationship that should exist between considerations of organizational form and IT infrastructure, highlighted in the innermost circle of our conceptualization of strategic information management in Figure I.1 For further reading on transnational organizations and associated strategic management issues see, for example, Ohmae (1989) In Chapter 5, we turn to the topic of managing change – a key feature in any IS strategy, as in any other strategy process (see, for example, Whittington, 1993) While strategy formulation (or formation) is one thing, implementation is quite another matter, suggest Markus and Benjamin! The authors focus on the role of IS professionals in the change process, their motivation being to ‘stimulate IS specialists’ efforts to become more effective – and more credible – agents of organizational change’ They describe – and critique – what they believe to be a commonly-held view of this role on the part of IS professionals, namely one which is embedded in technological determinism: a belief in ‘the ability of technology (versus people) to cause change’.* Referring to the organizational design† literature, they propose two alternative models that might be more appropriate, and more successful, in the light of the rapidly changing nature and impact of modern IT: the ‘facilitator’ model and the ‘advocate’ model As a result they propose new skills and career paths for IS personnel and IT managers, a revised research agenda for IS academics, and reform of IS educational curricula‡ to take account of the ‘softer’ skills necessary for the changed conditions pertaining in the late 1990s and into the twenty-first-century Chapter brings Part One of the book, dealing with IS strategy, to a close We trust that our treatment of this aspect of strategic information management has demonstrated just what a diverse and important topic this is – i.e that it is much more broadly based than commonly * A point taken up by Davenport (1996) in his critique of applications of the BPR concept (see also Chapter 14) † See, for example, Cummings and Huse (1989), Schwarz (1994), Kanter et al (1992) and Rogers (1995) ‡ Earlier calls for a more broadly based approach to IS education can be found in Buckingham et al (1987) 30 Strategic Information Management assumed, often with the focus being little more than on information technology issues Part Two then focuses on information systems planning, the means by which this more broadly based strategy may be developed References Avison, D and Fitzgerald, G (1995) Information Systems Development: Methodologies, Techniques and Tools, 2nd edn, McGraw-Hill, London Benbasat, I., Dexter, A., Drury, D and Goldstein, R (1984) A critique of the stage hypothesis: theory and empirical evidence Communications of the ACM, 27(5), May, 476–485 Buckingham, R A., Hirschheim, R A., Land, F F and Tully, C J (eds) Information Systems Education: Recommendations and Implementation, Cambridge University Press on behalf of the British Computer Society, Cambridge Ciborra, C.U and Associates (2000) From Control to Drift: The Dynamics of Corporate Information Infrastructures, Oxford University Press, Oxford Cummings, T G and Huse E F (1989) Organization Development and Change, 4th edn, West Publishing, St Paul, MN Currie, W I and Galliers, R D (eds) (1999) Rethinking Management Information Systems, Oxford University Press, Oxford Davenport, T (1996) Why reengineering failed The fact that forgot people Fast Company, Premier Issue, 70–74 Earl, M J (1986) Information systems strategy formulation In (1987), Critical Issues in Information Systems Research (eds R J Boland and R A Hirschheim, Wiley, Chichester 157–178 Earl, M J (1999) Strategy-making in the Information Age In W I Currie and R D Galliers (eds), op cit., 161–174 Galliers, R D (1991) Strategic information systems planning: myths, realities and guidelines for successful implementation, European Journal of Information Systems, 1(1), 55–64 Galliers, R D., Pattison, E M and Reponen, T (1994) Strategic information systems planning workshops: lessons from three cases International Journal of Information Management, 14, 51–66 Gibson, R and Nolan, D (1974) Managing the four stages of EDP growth Harvard Business Review, 52(1), January–February Greiner, L E (1972) Evolution and revolution as organizations grow Harvard Business Review, 50(4), July–August Gunton, T (1989) Infrastructure: Building a Framework for Corporate Information Handling, Prentice Hall, New York Hirschheim, R A., Earl, M J., Feeny, D and Lockett, M (1988) An exploration into the management of the information systems function: key issues and an evolutionary model Proceedings: Information Technology Management for Productivity and Strategic Advantage, IFIP TC8 Open Conference, Singapore, March Kanter, R M., Stein, B A and Jick, T D (1992) The Challenge of Organizational Change: How Companies Experience It and Leaders Guide It, Free Press, New York King, J and Kraemer, K (1984) Evolution and organizational information systems: an assessment of Nolan’s stage model Communications of the ACM, 27(5), May Kwon, T H and Zmud, R W (1987) Unifying the fragmented models of information systems implementation In R J Boland and R A Hirschheim (eds), (1987), op cit., 227–251 Lacity, M C and Willcocks, L P (2000) Global IT Outsourcing, Wiley, Chichester Nolan, R (1979) Managing the crises in data processing Harvard Business Review, 57(2), March–April Information Systems Strategy 31 Ohmae, K (1989) The global logic of strategic alliances, Harvard Business Review, 70(2), March–April, 143–154 Rogers, E M (1995) Diffusion of Innovations, 4th edn, Free Press, New York Sauer, C (1993) Why Information Systems Fail: A Case Study Approach, Alfred Waller, Henley-on-Thames Schwarz, R M (1994) The Skilled Facilitator: Practical Wisdom for Developing Effective Groups, Jossey-Bass, San Francisco, CA Ward, J., Griffiths, P (1997) Strategic Planning for Information Systems, 2nd edn, Wiley, Chichester Whittington, R (1993) What is Strategy? – And Does It Matter? Routledge, London Willcocks, L P., Feeny, D and Islei, G (1997) Managing IT as a Strategic Resource, McGraw-Hill, London Willcocks, L P and Lacity, M C (1997) Strategic Sourcing of Information Systems: Perspectives and Practices, Wiley, Chichester The Evolving Information Systems Strategy Information systems management and strategy formulation: applying and extending the ‘stages of growth’ concept R D Galliers and A R Sutherland Introduction For some time, reason has held that the organizational growth with respect to the use of Information Technology (IT) and the approach organizations take to the management and planning of information systems could be conceived of in terms of various, quite clearly defined, stages of maturity Whilst there has been some criticism of the models that have been postulated, many view the various ‘stages of growth’ models as being useful in designating the maturity (in IT terms) of organizations Four such ‘stages of growth’ models are described briefly below, i.e those postulated by: (a) Nolan (1979); (b) Earl (1983; 1986, as amended by Galliers, 1987a, 1989*); (c) Bhabuta (1988), and (d) Hirschheim et al (1988) The Nolan model is perhaps the most widely known and utilized of the four – by both practitioner and researcher alike Despite its critics, by 1984 it had been used as a basis for over 200 consultancy studies within the USA by Nolan, Norton and Company, and had been incorporated into IBM’s information systems planning consultancies (Nolan, 1984); Hamilton and Ives (1982) report that the original article describing the model (Gibson and Nolan, 1974) was one of the 15 most cited by information systems researchers * Galliers, R D (1989) The developing information systems organization: an evaluation of the ‘stages of growth’ hypothesis, paper presented at the London Business School, January 1989 34 Strategic Information Management The Nolan model Nolan’s original four-stage model (Gibson and Nolan, 1974) was later developed into a six-stage model (Nolan, 1979), and it is this latter model which is most commonly applied Like the models that followed it, it is based on the premise that the organizations pass through a number of identifiable growth phases in utilizing and managing IT These ‘stages of growth’ are then used to identify the organization’s level of maturity in this context, with a view to identifying key issues associated with further IT development Nolan posited that the growth phase could be identified primarily by analysing the amount spent on data processing (DP) as a proportion of sales revenue, postulating that DP expenditure would follow an S-curve over time More importantly, however, it was claimed that this curve appeared to represent the learning path with respect to the general use of IT within the organization As indicated above, the original four-stage model (Figure 2.1) was expanded into a six-stage model in 1979 with the addition of two new stages between ‘control’ and ‘maturity’, namely ‘integration’ and ‘data administration’ Figure 2.1 Four stages of DP growth (amended from Gibson and Nolan, 1974; Earl, 1989, p.28) The six-stage model is illustrated in Figure 2.2 As can be seen, Nolan indicates that, in addition to DP expenditure, there are four major growth processes that can be analysed to identify the organization’s stage of maturity with respect to IT use The scope of the application portfolio throughout the organization (moving from mainly financial and accounting systems to wider-ranging operational systems, to management information systems) The focus of the DP organization (moving from a centralized, ‘closed shop’ in the early stages to data resource management in maturity) The Evolving Information Systems Strategy 35 Figure 2.2 Nolan’s six-stage growth model (amended from Nolan, 1979) The focus of the DP planning and control activity (moving from a primarily internal focus in the first three stages to an external focus in the latter stages), and The level of user awareness [moving from a primarily reactive stance (reactive, that is, to centralized DP initiatives) in the first two stages, to being a driving force for change in the middle stages, through to a partnership in maturity] Nolan argues that the information systems management focus is very much concerned with technology per se during the earlier stages of growth, with a transformation point occurring at the completion of stage three, after which the focus is on managing the organization’s data resources, utilizing database technology and methods As indicated earlier, the model has been criticized because it has not proved possible to substantiate its claims to represent reality, either as a means to describe the phases through which organizations pass when utilizing IT, or as a predictor of change (Benbasat et al., 1984; King and Kraemer, 1984) In addition, its focus on database technology clearly dates the model Earl (1989), for example, argues that organizations will pass through a number of different learning curves with respect to different ITs, as illustrated in Figure 2.3 In addition, it is now clear that different parts of a single organization may well be at different stages of growth with respect to a particular IT 36 Strategic Information Management Figure 2.3 Multiple learning curves (amended from Earl, 1989, p.31) The Earl model Unlike Nolan’s model, Earl’s concentrates attention on the stages through which organizations pass in planning their information systems First described in 1983 (Earl, 1983), the model has been revised on a number of occasions (Earl, 1986, 1988, 1989) The version presented here is based on the two earlier versions, as amended by Galliers (1987a, 1989), bearing in mind Earl’s own subsequent changes As can be seen from Table 2.1, Earl illustrates the changing agenda for information systems planning by concentrating attention on what is seen as the primary task of the process: its major objective, the driving forces of the planning process (in terms of those involved), the methodological emphasis, and the context within which the planning takes place Following research on current information systems planning practice, Galliers adds to this a supplementary early stage of planning (which is essentially ad hoc in nature) and an additional factor, concerning the focus of the planning effort In the latter context, he argues that the focus has tended to change over the years from a predominantly isolated, Information Systems function orientation, through an organizational focus, to a competitive, environmental focus Earl’s argument is essentially that organizations begin their planning efforts by the first attempting to assess the current ‘state of play’ with respect to information systems coverage and IT utilization Increasingly, the focus shifts Table 2.1 Earl’s planning in stages model (amended from Earl, 1986, 1988, 1989) and Galliers (1987a, 1989) Factor Stages I II III IV V VI Task Meeting demands IS/IT audit Business support Detailed planning Strategic advantage Business-IT strategy linkage Objective Provide service Limit demand Agree priorities Balance IS portfolio Pursue opportunities Integrate strategies Driving force IS reaction IS led Senior management led User/IS partnership IS/executive led; user involvement Strategic coalitions Methological emphasis Ad hoc Bottom-up survey Top-down analysis Two-way prototyping Environmental scanning Multiple methods Context User/IS inexperience Inadequate IS resources Inadequate business/IS plans Complexity apparent IS for competitive advantage Maturity, collaboration Focus IS department Organization-wide Environment 38 Strategic Information Management to management concern for a stronger linkage with business objectives Finally, the orientation shifts to a strategic focus, with a balance being maintained in relation to the make-up of planning teams (between information systems staff, management and users), environmental and organizational information (with the likelihood of inter-organizational systems being developed, cf Cash and Konsynski, 1985), and the range of approaches adopted (with multiple methods being accepted) The Bhabuta model Based on earlier work by Gluck et al (1980), which proposes a four-stage process of evolution towards strategic planning, and a somewhat similar model of IT assimilation and diffusion postulated by McFarlan et al (1982, 1983), Bhabuta (1988) developed a model which attempts to map the progress towards formal strategic planning of information systems This is illustrated in Table 2.2 Underpinning Bhabuta’s argument is the contention that strategies based on productivity improvement (and the information systems needed to support them) ‘will become the dominant paradigm in the turbulent and fiercely competitive markets of the next decade’ (Bhabuta, 1988, p.1.72) His model is more widely focused than either the Nolan or Earl models, in that it attempts to bring together elements of, for example, strategy formulation, information systems, and the mechanisms by which the information systems function is managed The value systems associated with each phase of the model are also identified (cf Ackoff, 1981) In interpreting the Bhabuta model, it should be noted that the categories used are not distinct nor absolute With the maturing of IT utilization, and managerial sophistication with respect to IT, it can be expected that some of the attributes associated with, for example, Phase and organizations will emerge within Phase and organizations This point takes account of some of the criticism of the Nolan model (Benbasat et al., 1984), which is itself based on earlier work by Greiner (1972), regarding the discontinuities that organizations experience in growth The Hirschheim et al model The Hirschheim et al (1988) model also builds on the earlier work of Nolan (1979) and arises from research, undertaken during the first half of 1986, into the evolution and management of the IT function in a number of British organizations As a result of this research Hirschheim and his colleagues contend that in companies where top management had begun to realize that information systems are vital to their business, organizations move through three evolutionary phases in their management of the IS/IT function The three The Evolving Information Systems Strategy 57 Superordinate goals Interactive planning, harmonious relationships and interdependent team work are the predominant values associated with this stage The internal focus is on collaborative IT initiatives between groups, brought together to develop strategic information systems products The external focus is on strategic alliances utilizing shared information systems, and the value chain is extended to include suppliers and customers This revised ‘stages of growth’ model is summarized in Table 2.6 Application of the revised model Application of the revised model in the context of the four Perth-based organizations is described in more detail elsewhere (Galliers and Sutherland, 1991) In this context, however, and in subsequent applications, the model has proved useful not only in clarifying the location of each organization in IT maturity terms, but also in providing insights into aspects of IS management and planning which appear to require particular attention Specific insights into the model’s application include the following: Any organization is likely to display characteristics associated with a number of stages for each of the Seven ‘S’ elements It is unlikely that any particular organization will find itself entirely within one stage In addition, it is most likely that different parts of a single organization will be at different stages of growth at any one time Use of the model in this context provides management with insights into areas/elements requiring particular attention Elements in early stages of the model must be adequately addressed before related elements in later stages are likely to be successfully undertaken For instance, Decision Support Systems (DSS) or Executive Information Systems (EIS) are extremely unlikely to be effective without the right kind of basic operational systems/databases in place Furthermore, an organization simply trying to overcome the large backlog and heavy maintenance load of systems (associated with Stage 2) is unlikely to be able to develop substantial strategic information systems, without further development in, for example, skill levels and planning approaches Organizations not need to work slavishly through all the elements of each stage, making the same mistakes as many organizations have done in the past For example, ‘young’ organizations can make effective use of top-down information systems planning to circumvent some of the pitfalls associated with this aspect of the first two stages Typically, however ‘skipping’ portions of the model can only be successfully accomplished when the senior management of the organization has already experienced the conditions that affect performance in the earlier stages, and thus understand the benefit/advantages of following ‘correct’ procedures Table 2.6 A revised ‘stages of growth’ model (Sutherland and Galliers, 1989, p.23, reproduced in Galliers, 1991, pp 61–62) Element Stage Ad hocracy Foundations Centralized Cooperation Entrepreneurial Harmonious Strategy Acquisition of hardware, software, etc IT audit Find out and meet user needs (reactive) Top-down IS planning Integration, coordination and control Environmental scanning and opportunity seeking Maintain comparative strategic advantage Monitor futures Interactive planning Structure None IS often subordinate to accounting or finance Data processing department Centralized DP shop End-users running free at Stage Information centres, library records, etc in same unit Information services SBU coalition(s) (many but separate) Centrally coordinated coalitions (corporate and SBU views concurrently) Systems Ad hoc unconnected Operational Manual and computerized IS Uncoordinated Concentration in financial systems Little maintenance Many applications Many gaps Overlapping systems Centralized Operational Mainly financial systems Many areas unsatisfied Large backlog Heavy maintenance load Still mostly centralized Uncontrolled enduser computing Most major business activities covered Database systems Decentralized approach with some controls, but mostly lack of coordination Some DSS-ad hoc Integrated office technology systems Decentralized systems but central control and coordination Added value systems (more marketing oriented) More DSS-internal, less ad hoc Some strategic systems (using external data) Lack of external and internal data integration of communications technologies with computing Inter-organizational systems (supplier, customer, government links) New IS-based products External-internal data integration Table 2.6 Continued Element Stage Ad hocracy Foundations Centralized Cooperation Entrepreneurial Harmonious Staff Programmers/ contractors Systems analysts DP Manager IS planners IS Manager Data Base Administrator Data Administrator Data analysts Business analysts Information Resources Manager (Chief Information Officer) Corporate/business/IS planners (one role) IS Director/member of board of directors Style Unaware Don’t bother me (I’m too busy) Abrogation/ delegation Democratic dialectic Individualistic (product champion) Business team Skills Technical (very low level), individual expertise Systems development methodology IS believes it knows what the business needs Project management Organizational integration IS knows how the business works Users know how IS works (for their area) Business management (for IS staff) IS Manager – member of senior executive team Knowledgeable users in some IS areas Entrepreneurial marketing skills All senior management understand IS and its potentialities Superordinate goals Obfuscation Confusion Senior management concerned DP defensive Cooperation Opportunistic Entrepreneurial Intrapreneurial Interactive planning 60 Strategic Information Management The positive aspects of earlier stages of the model are not discarded when moving through to the later stages More ‘mature’ organizations will incorporate those elements from all proceeding stages to the degree that they are consistent with the later stages Thus, organization at Stage will still perform Information Systems Planning, they will still have a DP function (of sorts) and will be likely to require Information Centres The more mature organization will be flexible enough to determine the most appropriate nature of IT use and organization, rather than blindly following the structures and procedures adopted by other organizations To be effective, organizations should consolidate in most elements up to a particular stage, and then select certain key elements (in accordance with their own planning critiera/priorities), which they should then address in moving to the next stage Indeed, all elements should be addressed in order to pass more smoothly on to the following stage It is not necessarily the case that organizations will develop automatically towards the more mature stages Indeed, it has been found that organizations move ‘backwards’ at times, as a result of a change in personnel or managerial attitudes, see Galliers (1991) for example Furthermore, it has proved useful at times to chart the development of the organization over a period of time by identifying when (i.e in what year) each particular stage was reached The model has been found to be particularly useful in that it takes a holistic view of information systems management issues, dealing as it does with the development of information systems applications and information systems planning/strategy formulation, the changing nature of required skills, management style/involvement, and organizational structures While the model cannot pretend to give all the answers, it does provide a framework which enables appropriate questions to be raised when setting out an appropriate strategy for information systems, giving pointers as to what is feasible as well as desirable in this regard Further testing and refinement of the model is taking place, but after two years of application, the authors are confident that the model is sufficiently refined to provide both IT and general management with a usable and useful framework to assist in the task of marshalling their IT resources in line with business imperatives While one might argue with the precise detail of the contents of each element at each stage of the model, this does appear not to affect the utility Its key contribution is in focusing management attention onto a broad range of issues associated with the planning and management of information systems, in surfacing assumptions and attitudes held by key executives about the role IT does and might play in achieving/supporting business objectives The Evolving Information Systems Strategy 61 and thereby enabling a shared understanding/vision to be achieved, and (most importantly) providing an easily understood means of putting IS/IT management on the senior and middle management agenda References Ackoff, R L (1981) Creating the Corporate Future, Wiley, New York British Computer Society (1990) From Potential to Reality: ‘Hybrids’ – A Critical Force in the Application of Information Technology in the 1990s A Report by the British Computer Society Task Group on Hybrids, January Benbasat, I., Dexter, A., Drury, D and Goldstein, R (1984) A critique of the stage hypothesis: theory and empirical evidence Communications of the ACM, 27(5), 476–485 Bhabuta, L (1988) Sustaining productivity and competitiveness by marshalling IT In Proceedings: Information Technology Management for Productivity and Strategic Advantage, IFIP TC-8 Open Conference, Singapore, March Cash, J I (Jr.) and Konsynski, B R (1985) IS Redraws competitive boundaries Harvard Business Review, 63(2), March–April, 134–142 Earl, M J (1983) Emerging trends in managing new information technologies, Oxford Centre for Management Studies Research Paper 83/4 In The Management Implications of New Information Technology (ed N Peircy), 1986, Croom Helm, London Earl, M J (1986) Information systems strategy formulation In Critical Issues in Information Systems Research (eds R J Boland and R A Hirschheim) (1987), Wiley, Chichester Earl, M J (ed.) (1988) Information Management: The Strategic Dimension, The Clarendon Press, Oxford Earl, M J (1989) Management Strategies for Information Technology, Prentice Hall, Hemel Hempstead Edwards, B., Earl, M and Feeny, D (1989) Any way out of the labyrinth of managing IS? RDP89/3, Oxford Institute of Information Management Research and Discussion Paper, Templeton College, Oxford University Galliers, R D (1987a) Information systems planning in the United Kingdom and Australia: a comparison of current practice In Oxford Surveys in Information Technology (ed P I Zorkorczy), Vol 4, Oxford University Press, Oxford, pp 223–255 Galliers, R D (ed.) (1987b) Information Analysis: Selected Readings, Addison-Wesley, Wokingham Galliers, R D (1990) Problems and answers of the IT skills shortage The Computer Bulletin, 2(4), 25 May 62 Strategic Information Management Galliers, R D (1991) Strategic information systems planning: myths, reality and guidelines for successful implementation European Journal of Information Systems, 1, 55–64 Galliers, R D and Sutherland, A R (1991) Organizational learning and IT: steps towards managing and planning strategic information systems Warwick Business School Working Paper, University of Warwick, January Gibson, D and Nolan, R L (1974) Managing the four stages of EDP growth Harvard Business Review, 52(1), January–February Gluck, F W., Kaufman, S P and Walleck, A S (1980) Strategic management for competitive advantage Harvard Business Review, 58(4), July– August Greiner, L E (1972) Evolution and revolution as organisations grow Harvard Business Review, 50(4), July–August Hamilton, S and Ives, B (1982) Knowledge utilisation among MIS researchers MIS Quarterly, 6(12), December Hirschheim, R., Earl, M., Feeny, D and Lockett, M (1988) An exploration into the management of the information systems function: key issues and an evolutionary model Proceedings: Information Technology Management for Productivity and Strategic Advantage, IFIP TC-8 Open Conference, Singapore, March King, J and Kraemer, K (1984) Evolution and organizational information systems: an assessment of Nolan’s stage model Communications of the ACM, 27(5), May Land, F F (1982) Adapting to changing user requirements Information and Management, 5, Reproduced in Galliers, R D (ed.) (1987) Information Analysis: selected readings, Addison-Wesley, Wokingham, pp 203–229 McFarlan, F W and McKenney, J L (1982) The Information archipelago: gaps and bridges Harvard Business Review, 60(5), September–October McFarlan, F W., McKenney, J L and Pyburn, P (1983) The information archipelago: plotting a course Harvard Business Review, 61(1), January– February Nolan, R (1979) Managing the crises in data processing Harvard Business Review, 57(2), March–April Nolan, R (1984) Managing the advanced stages of computer technology: key research issues In The Information Systems Research Challenge (ed F W McFarlan), Harvard Business School Press, Boston, pp 195–214 Oliver, I and Langford, H (1984) Myths of demons and users Proceedings: Australian Computer Conference, Australian Computer Society Inc., Sydney, November Reproduced in Galliers, R D (ed.) (1987) Information Analysis: selected readings, Addison-Wesley, Wokingham, pp 113–123 Pascale, R T and Athos, A G (1981) The Art of Japanese Management, Penguin, Harmondsworth The Evolving Information Systems Strategy 63 Sobkowich, R (1985) When the company picks a CIO, will you be IT? Computerworld, 24 June Somogyi, E K and Galliers, R D (1987a) Applied information technology: from data processing to strategic information systems Journal of Information Technology, 2(1), 30–41, March Somogyi, E K and Galliers, R D (1987b) Towards Strategic Information Systems, Abacus Press, Cambridge MA Sullivan, C H (1985) Systems planning in the information age Sloan Management Review, Winter Sutherland, A R and Galliers, R D (1989) An evolutionary model to assist in the planning of strategic information systems and the management of the information systems function School of Information Systems Working Paper Curtin University of Technology, Perth, Western Australia, February Ward, J., Griffiths, P and Whitmore, P (1990) Strategic Planning for Information Systems, Wiley, Chichester Reproduced from Galliers, R D and Sutherland, A R (1991) Information systems management and strategy formulation: the ‘stages of growth’ model revisited Journal of Information Systems, 1(2), 89–114 Reprinted by permission of the Publishers, Blackwell Scientific Ltd Questions for discussion The authors, in describing the Nolan model, state that ‘different parts of a single organization may well be at different stages of growth with respect to a single IT’ What implications does this have for the management of IT and for IT strategy? The authors describe several prior models to IT evolution in organizations What are the relative strengths of the models in (a) their applicability to describe actual situations, and (b) in their usefulness for managers of IT? Do you agree with the underlying assumption that moving through the stages represents a desired advancement in the use of IT in an organization? Can you think of some contextual factors that might predict in which phase an organization would be placed regarding their management of IT and whether they move slowly or quickly through the phases? What implications does the increasing pace of technology advances and the increasingly networked world have for the revised stages of growth model? Information Strategy Assessment of information strategies in insurance companies M T Smits, K G van der Poel and P M A Ribbers This chapter describes the information strategies of three major insurance companies in the Netherlands A research model was developed as an aid to describe how managers nowadays deal with information strategy We report on the linkages between information strategies and business strategies, the roles of the stakeholders involved, and how the results are perceived We found that in all three companies the executive board, IT management and line management are heavily involved in the information strategy process The main focus in the three companies is on adjusting IT to business goals and processes, with only some attention directed towards creating a competitive advantage with IT With respect to the effects of information strategy, we found that none of the three companies systematically evaluate the effects of information strategies on an organizational or a business process level More case study research is required to look into the evolutionary changes of information strategies within organizations, and the effects of information strategies on the business processes and the use of IT over time Introduction The concept of ‘strategy’ carries several connotations Its roots in military tradition indicate innovative leadership and bold visions Anthony (1965) has defined strategic planning as the definition of goals and objectives Ansoff (1984) sees strategy as a mechanism for coping with a complex and changing environment Mintzberg (1980) views strategy in five different ways: as a plan (rules leading to a goal); a ploy (a trick to beat competitors); a pattern (a way of behaving); a position (a safe place); and a perspective (a vision, a set of assumptions) Andrews (1980) defines strategy as: ‘the pattern of decisions Information Strategy 65 that determines goals, produces principal policies and plans and defines the range of business’ In general, the concept of strategy relates to corporate strategy, which is the strategy that guides the corporation or enterprise as a whole Business units within large organizations have business strategies related to their specific product-market situation (Porter, 1987) From corporate or business strategy derives the notion of functional strategies such as marketing strategy, manufacturing strategy, personnel strategy, financial strategy and information strategy Of interest are the linkages between the functional strategies and the business strategies Specifically, business strategy and information strategy can be linked in several ways (Parker et al., 1989; Henderson and Venkatraman, 1993) In this chapter we investigate whether these (theoretical) linkages exist in organizations with a substantial level of sophistication and interest in information management We describe how managers in these organizations formulate information strategies in practice, which stakeholders are involved, how it links to business strategy, and how the results are perceived This is done within the context of previous information strategy activities, looking for possible changes in the approach to information strategy Our purpose is to learn how information intensive organizations make plans with respect to the demand and supply of information, and how this relates to the planning of IT The research question in this chapter is three-fold: (i) how can the practice of information strategy in an organization be analysed; (ii) what is the actual practice in the insurance industry; and (iii) how does information strategy relate to business strategy? After scanning the literature we decided to carry out case studies within a small number of organizations, based on interviews with both IS managers as well as general managers, in order to provide a richness in understanding strategy that cannot be obtained via a survey approach (Chan and Huff, 1992) We describe the planning process for information strategies as well as the contents of the plans, as suggested by King (1988) and Walsham and Waema (1994) A framework to analyse an organization’s information strategy was derived from the literature and used to gather information from both informants and secondary sources, e.g company documents The following section summarizes the information strategy literature, while Section provides an overview of the model used in this research The final two sections use this model to analyse the information strategy within three major insurance organizations and compare the findings with related research, respectively Literature on information strategy Information strategy began to attract interest at the beginning of the 1970s, and many terms have been used since then to address the alignment of 66 Strategic Information Management information systems and business strategy Similar terms are, for example, information systems strategy (ISS), information systems strategic planning (ISSP) and strategic information systems planning (SISP) For an extensive review of the literature we refer to Earl (1989), Ward et al (1990), Galliers (1993) and Fitzgerald (1993) A frequently used term, related to information strategy, is strategic information systems planning (SISP), defined as ‘the process of deciding the objectives for organizational computing and identifying potential computer applications which the organization should implement’ (Lederer and Sethi, 1988) However, Galliers (1991) views information strategy as only a part of SISP, together with information technology (IT) strategy, information management (IM) strategy, management of change strategy, and human resources strategy Earl (1989) sees SISP as a combination of information systems strategy (aligning IS with business goals, and exploiting IT for competitive advantage), IM strategy and IT strategy In this study we used the term information strategy, and define it as: ‘a complex of implicit or explicit visions, goals, guidelines and plans with respect to the supply and the demand of formal information in an organization, sanctioned by management, intended to support the objectives of the organization in the long run, while being able to adjust to the environment’ The definitions might look similar, but strict comparison shows that the SISP definition tends to focus on explicit objectives and on applications and technology Our definition concentrates on the use and importance of information in an organization, starting with the planning of information (in the end influencing IT, as well as influenced by IT) Therefore we preferred this definition as a starting point to investigate how contemporary organizations deal with their needs for information and the planning of IT The other three definitions mentioned were subsequently used to complete the research model and to develop the questionnaires, as described in Section Of particular importance is the linkage between the information strategy and the business strategy in an organization (Parker et al., 1989) Henderson Business strategy IT strategy Business processes IT processes Figure 3.1 Strategic alignment model (Parker et al., 1989; Henderson and Venkatraman, 1993) Information Strategy 67 and Venkatraman (1993) propose the strategic alignment model (Figure 3.1) covering the linkages between four domains in an organization: (i) the business strategy domain (BS); (ii) the business processes domain (BP); (iii) the IT strategy domain (ITS); and (iv) the IT processes domain (ITP) They distinguish two main perspectives on how the alignment between the domains can take place In the first perspective business strategy is the driving force for BP or ITS, ultimately affecting ITP In the second perspective IT strategy is the driving force for ITP or BS, ultimately affecting BP We have analysed the linkages between information strategy and business strategy in several ways: by looking at the attitudes of senior managers (as a part of the information strategy environment), by analysing the information strategy process (with roles, methods and coordination), by analysing the content of the strategy, and by looking at how the effects are evaluated As a support for these analyses we used the research model, explained in the next section Research model The purpose of the model is to provide a framework for case study research into the actual practice of information strategy in contemporary organizations We wanted to use the model as guideline for structured interviews with managers from various departments and levels, and as a framework to categorize the findings The model used in this study focuses on four issues: environment, process, form and content, and effects of information strategy The four components of the model are related to each other in several ways The main relationship is that the environment influences the process which produces the content (being the output of the strategy process), which yields the effects, which change the environment (the impact or outcome of the strategy) and so close the loop There is a fair amount of similarity between this model and the input – process – output (IPO) model of King (1988): the planning process (P) converts several inputs (I) from the environment into a set (O) of mission, Information Strategy Environment Information Strategy Effects Figure 3.2 Information Strategy Process Information Strategy Form and Contents Research model describing four components of information strategy 68 Strategic Information Management Table 3.1 Summary of the information strategies in three insurance companies Information strategy Components/aspects Environment Process In company A In company B In company C Position in the Second tier industry Main Bank distribution channel Special factor Recently merged Company $2000M revenue Employees 2000 Business Explicit, strategy known Internal Product organization oriented Management Positive attitude to IT IT 2%