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Strategic Information Management Challenges and strategies in managing information systems Third edition Robert D. Galliers and Dorothy E. Leidner OXFORD AMSTERDAM BOSTON LONDON NEW YORK PARIS SAN DIEGO SAN FRANCISCO SINGAPORE SYDNEY TOKYO Butterworth-Heinemann An imprint of Elsevier Science Linacre House, Jordan Hill, Oxford OX2 8DP 200 Wheeler Road, Burlington MA 01803 First published 1994 Second edition 1999 Third edition 2003 Copyright © 1994, 1999, R. D. Galliers, D. E. Leidner and B. Baker. All rights reserved Copyright © 2003, R. D. Galliers and D. E. Leidner. All rights reserved The right of R. D. Galliers and D. E. Leidner to be identified as the authors of this work has been asserted in accordance with the Copyright, Designs and Patents Act 1988 No part of this publication may be reproduced in any material form (including photocopying or storing in any medium by electronic means and whether or not transiently or incidentally to some other use of this publication) without the written permission of the copyright holder except in accordance with the provisions of the Copyright, Designs and Patents Act 1988 or under the terms of a licence issued by the Copyright Licensing Agency Ltd, 90 Tottenham Court Road, London, England W1T 4LP, Applications for the copyright holder’s written permission to reproduce any part of this publication should be addressed to the publisher British Library Cataloguing in Publication Data A catalogue record for this book is available from the British Library Library of Congress Cataloguing in Publication Data A catalogue record for this book is available from the Library of Congress ISBN 0 7506 5619 0 For information on all Butterworth-Heinemann publications visit our website at www.bh.com Composition by Genesis Typesetting Limited, Rochester, Kent Printed and bound in Great Britain Contents List of contributors ix Preface xi Introduction: The Emergence of Information Technology as a Strategic Issue 1 1 Developments in the Application of Information Technology in Business 3 Information technology in business: from data processing to strategic information systems E. K. Somogyi and R. D. Galliers (with a Postscript by R. D. Galliers and B. S. H. Baker) Part One: Information Systems Strategy 27 2 The Evolving Information Systems Strategy 33 Information systems management and strategy formulation: applying and extending the ‘stages of growth’ concept R. D. Galliers and A. R. Sutherland 3 Information Strategy 64 Assessment of information strategies in insurance companies M. T. Smits, K. G. van der Poel and P. M. A. Ribbers 4 The Information Technology and Management Infrastructure Strategy 89 Globalization and information management strategies J. Karimi and B. R. Konsynski 5 Change Management Strategy 113 Change agentry – the next information systems frontier M. L. Markus and R. I. Benjamin vi Contents Part Two: Information Systems Planning 147 6 Information Systems Plans in Context: A Global Perspective 151 Understanding the global information technology environment: representative world issues P. C. Palvia and S. C. Palvia 7 Approaches to Information Systems Planning 181 Experiences in strategic information systems planning M. J. Earl 8 The Information Systems Planning Process 216 Meeting the challenges of information systems planning A. L. Lederer and V. Sethi 9 Evaluating the Outcomes of Information Systems Plans 239 Managing information technology evaluation – techniques and processes L. P. Willcocks Part Three: The Information Systems Strategy–Business Strategy Relationship 261 10 Measuring the Information Systems–Business Strategy Relationship 265 Factors that influence the social dimension of alignment between business and information technology objectives B. H. Reich and I. Benbasat 11 Information Systems–Business Strategy Alignment 311 The dynamics of alignment: insights from a punctuated equilibrium model R. Sabherwal, R. Hirschheim and T. Goles 12 Strategies in Response to the Potential of Electronic Commerce 347 Market process reengineering through electronic market systems: opportunities and challenges H. G. Lee and T. H. Clark 13 The Strategic Potential of the Internet 376 Strategy and the Internet M. E. Porter Contents vii 14 Evaluating the Impact of IT on the Organization 404 The propagation of technology management taxonomies for evaluating investments in information systems Z. Irani and P. E. D. Love Part Four: Information Systems Strategy and the Organizational Environment 423 15 The Information Technology–Organizational Design Relationship 427 Information technology and new organizational forms R. Lambert and J. Peppard 16 Information Technology and Organizational Decision Making 460 The effects of advanced information technologies on organizational design, intelligence and decision making G. P. Huber 17 The Information Technology–Organizational Culture Relationship 497 Understanding information culture: integrating knowledge management systems into organizations D. E. Leidner 18 Information Systems and Organizational Learning 526 The social epistemology of organizational knowledge systems B. T. Pentland 19 Information Technology and Customer Service 555 Redesigning the customer support process for the electronic economy: insights from storage dimensions O. A. El Sawy and G. Bowles 20 Information Technology and Organizational Performance 588 Beyond the IT productivity paradox L. P. Willcocks and S. Lester Author index 609 Subject index 617 Contributors* B. S. H. Baker, Virgin Direct, UK (formerly Research Fellow in Business Innovation and Information Systems Strategies, Warwick Business School, Coventry, UK) I. Benbasat, University of British Columbia, Vancouver, British Columbia, Canada R. I. Benjamin, Robert Benjamin Consultants, Rochester, New York and School of Information Studies, Syracuse University, New York, USA G. Bowles, Storage Dimensions, Milpitas, California, USA T. H. Clark, Hong Kong University of Science and Technology, Hong Kong, China M. J. Earl, London Business School, UK (formerly with Oxford Institute of Information Management, Templeton College, Oxford University, UK) O. A. El Sawy, University of Southern California, Los Angeles, California, USA R. D. Galliers, London School of Economics, London, UK and Bentley College, Waltham, Massachusetts, USA (formerly with Warwick Business School, Coventry, UK) T. Goles, University of Houston, Houston, Texas, USA R. Hirschheim, University of Houston, Houston, Texas, USA G. P. Huber, University of Texas at Austin, Texas, USA Z. Irani, Brunel University, Uxbridge, UK J. Karimi, University of Colorado, Denver, Colorado, USA B. R. Konsynski, Emory University, Atlanta, Georgia, USA (formerly with Harvard Business School, Boston, Massachusetts, USA) R. Lambert, Cranfield School of Management, Bedford, UK A. L. Lederer, University of Kentucky, Lexington, Kentucky, USA (formerly with Oakland University, Rochester, Michigan, USA) H. G. Lee, Hong Kong University of Science and Technology, Hong Kong, China * Where a contributor’s institution has changed since publication of their article, both their current and former affiliations are listed. x Contributors D. E. Leidner, Baylor University, Waco, Texas, USA (formerly with INSEAD, Fontainebleau, France) S. Lester, Lloyd’s Register, London and Oxford Institute of Information Management, Templeton College, Oxford University, UK P. E. D. Love, Australian Agile Construction Initiative, Australia M. L. Markus, Bentley College, Waltham, Massachusetts, USA (formerly with Claremont Graduate School, Claremont, California, USA) P. C. Palvia, University of Memphis, Tennessee, USA S. C. Palvia, Long Island University, New York, USA B. T. Pentland, Michigan State University, Michigan, USA J. Peppard, Cranfield School of Management, Bedford, UK K. G. van der Poel, Tilburg University, Tilburg, The Netherlands M. E. Porter, Harvard Business School, Boston, Massachusetts, USA B. H. Reich, Simon Fraser University, Vancouver, British Columbia, Canada P. M. A. Ribbers, Tilburg University, Tilburg, The Netherlands R. Sabherwal, University of Missouri, St Louis, Missouri, USA V. Sethi, College of Business Administration, University of Oklahoma, Norman, Oklahoma, USA M. T. Smits, Tilburg University, Tilburg, The Netherlands. E. K. Somogyi, The Farrindon Partnership, London, UK (formerly with PA Computers & Telecommunications) A. R. Sutherland, Ess Consulting, Perth, Western Australia (formerly with Corporate Systems Planning) L. P. Willcocks, Warwick Business School, Coventry, UK (formerly with Oxford Institute of Information Management, Templeton College, Oxford University, UK and Erasmus University, Rotterdam, The Netherlands) Preface As with the first and second editions, this third edition of Strategic Information Management: Challenges and strategies in managing informa- tion systems aims to present the many complex and inter-related issues associated with the management of information systems, with a likely audience of MBA or other Master’s level students and senior undergraduate students taking a course in strategic information management or something similar. Students embarking on research in this area should find the book of particular help in providing a rich source of material reflecting recent thinking on many of the key issues facing executives in information systems management. And like the first two editions, this third does not aspire to familiarize the reader with the underlying technology components of information systems nor enlighten the reader on expected trends in emerging technologies. While the second edition was a large departure from the first in the organization and readings, the third edition follows the same framework presented in the second edition while updating the chapters as much as possible. We will briefly recapture the organizing framework for those not familiar with the second edition. The concept of ‘strategic information management’ conveys manifold images, such as the strategic use of information systems, strategic information systems planning, strategic information systems . . . Our conceptualization of the term, and hence of the scope of the book, is presented in Figure 0.1. The inner circle of the figure depicts the information systems (IS) strategy. Whether explicitly articulated, or not 1 as appears to be frequently the case (Reich and Benbasat, 1996), without an IS strategy, the achievements of the IS in any given organization are likely to be more a result of hap and circumstance than a carefully guided intentional objective. Three of the dimensions of IS strategy proferred in Galliers (1991), drawing from Earl (1989), form the major topics of the readings in the first section of the book – information, information technology (IT), and information management strategy, and the related change management strategy. 1 See also Ciborra et al. (2000). xii Preface The second circle in Figure 0.1, encompassing that of the IS strategy, depicting IS Planning, forms the basis of the second section of the book. While the literature often associates Strategic IS Planning with IS strategy, we consider the topics as two: the plan produces the strategy. Included under the umbrella of IS planning are considerations of the IS planning environment, of the major issues of importance to IS planners, of the principal approaches used in developing IS plans, and of the evaluation of the success of IS. The third circle in Figure 0.1 naturally forms the third section of the book, which considers the link between an organization’s IS strategy (the inner circle) and the organization’s business strategy. Because of the common substitution of IS planning for IS strategy in the literature, it was difficult to find articles that dealt explicitly with an IS strategy component as conceptualized in our figure. The topics forming this third section include two readings on IS-Business alignment, two readings concerned with eBusiness Strategies, and one reading concerned with the evaluation of IT proposals. Four of these chapters are new to this edition. The outermost circle depicts the fourth and final section of the book, which offers some readings that examine the organizational outcomes of IS. The Figure 0.1 Conceptualizing strategic information management Preface xiii articles in this section deal less with IS strategy as the underlying basis but with IS and their impact on the organization. The reason behind the inclusion of this fourth section is that, ultimately, the aim of introducing IS into organizations is to have positive results on the organization. These articles consider the relationships of IT to organizational structure, organizational design, organizational culture, organizational communication and decision making, organizational learning, customer relationships, and organizational performance. Two new chapters in Part Four are included in this edition. The specific readings included in each section will be briefly summarized in the section introductions and hence will not be introduced here. Some of the articles included are marked by an academic quality. It might be helpful to suggest students prepare an analysis of the article using the following basic questions: (1) The research question: what is the major question and why is it important? (2) The assumptions: what are some of the primary assumptions guiding the study and are these valid in today’s context? (3) The method: what method was used to investigate the questions (interviews, surveys, experi- ments, other) and how might the method have influenced, for better or worse, the results? (4) The results: what were the major findings, what was new, interesting, or unexpected in the findings and what are the implications of the findings for today’s IT manager? Following each article, we offer some questions that could serve as points of departure for classroom discussion. We recommend additional readings relevant to the chapters in the section introductions. What we have attempted to achieve is to cover some of the more important aspects of each topic, while at the same time providing references to other important work. The subject of strategic information management is diverse and complex. It is not simply concerned with technological issues – far from it in fact. The subject domain incorporates aspects of strategic management, globalization, the management of change and human/cultural issues which may not at first sight have been considered as being directly relevant in the world of information technology. Experience, often gained as a result of very expensive mistakes (for example, the London Stock Exchange’s ill-fated Taurus System), informs us that without due consideration to the kind of issues introduced in this book, these mistakes are likely to continue. In selecting readings for this edition with the objective of covering the topics introduced in Figure 0.1, we noticed that the majority of new work dealt with topics covered in the third and fourth sections. We were unable to find many new ideas about IS strategy per se or about IS planning per se. 2 However, we found many new ideas concerning the IS–Business Strategy relationship as well as the relationship of IS to organizational outcomes. 2 A Special Issue of the Journal of Strategic Information Systems is planned, designed to fill this gap. [...]... M J (19 89) Management Strategies for Information Technology, Prentice Hall, London Galliers, R D (19 91) Strategic information systems planning: myths, reality, and guidelines for successful implementation European Journal of Information Systems, 1( 1), 55–64 Reich, B H and Benbasat, I (19 96) Measuring the linkage between business and information technology objectives, MIS Quarterly, 20 (1) , 55– 81 Introduction:... References Cash, J I (19 85) Interorganizational systems: an information society opportunity or threat The Information Society, 3(3), 19 9–228 Galliers, R D and Baets, W R J (19 98) Information Technology and Organizational Transformation: Information for the 21st Century Organization, Wiley, Chichester Holland, C (ed.) (19 98) Special edition on electronic commerce Journal of Strategic Information Systems,... Morton (19 78) point out, the MIS activity was not really a focus on management information but on information management We could go further: the MIS activity of the era was concerned with data management, with little real thought being given to meeting management information needs In the late 19 70s Keen and Scott Morton were able to write without fear of severe criticism that management information. .. D (19 82) Building Effective Decision Support Systems, Prentice Hall, New York Tofler, A (19 80) The Third Wave, Bantam Books Williams, G and Welch, M (19 85) A microcomputing timetable BYTE, 10 (9), September Reproduced from Somogyi, E K and Galliers, R D (19 87) Applied information technology: from data processing to strategic information systems Journal of Information Technology, 2 (1) , March, 30– 41 Reprinted... T W., Yates, J and Benjamin, R I (19 89) The logic of electronic markets Harvard Business Review, May–June, 16 6 17 2 Zuboff, S (19 88) In the Age of the Smart Machine: The Future of Work and Power, ButterworthHeinemann, Oxford 1 Developments in the Application of Information Technology in Business Information technology in business: from data processing to strategic information systems E K Somogyi and... aggregate the data, transform them in certain ways 12 Strategic Information Management and offer them to management In this way a powerful information resource is on tap for senior management Well, what is wrong with this idea? Several practical matters presented difficulties to the naive data processing visionary who believed in a totally integrated management information system (MIS) resting on a corporate... data, the information that management needed to run the business That the data processing profession during the 19 70s developed useful and powerful data analysis and data management techniques, and learned a great deal about data management, is without doubt But the notion that, through their data management, data aggregation and reporting activities, they provided management with information to assist... flexible approach arose Management need for crossrelating and cross-referencing data, which arises from basic operational processes, in order to produce coherent information and exercise better control, meant that the cumbersome, stand-alone and largely centralized systems operating in remote batch mode were no longer acceptable By the 10 Strategic Information Management end of the 19 60s the focus of attention... forefront The emphasis shifted from the provision of data to the provision of information and to speeding up information flows Important new roles for information systems The major task for many information systems (IS) departments in the early 19 80s is making information available The problems of interconnecting and exchanging information in many different forms and at many different places turned the... Grosch, H R J (19 53) High-speed arithmetic: the digital computer as a research tool J Opt Soc Am., April Keen, P G W and Scott Morton, M S (19 78) Decision Support Systems: An Organizational Perspective, Addison-Wesley, Reading, MA Land, F F (19 83) Information Technology: The Alvey Report and Government Strategy An Inaugural Lecture The London School of Economics 22 Strategic Information Management Sprague, . edition. The concept of strategic information management conveys manifold images, such as the strategic use of information systems, strategic information systems planning, strategic information systems. Approaches to Information Systems Planning 18 1 Experiences in strategic information systems planning M. J. Earl 8 The Information Systems Planning Process 216 Meeting the challenges of information. Information Technology as a Strategic Issue 1 1 Developments in the Application of Information Technology in Business 3 Information technology in business: from data processing to strategic information