Strategic Management of Information System in The 21st Century

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IT Paragon

7 min readMar 19, 2022

Hi bro and sis, welcome back to my medium. I’m so sorry I haven’t written the article in a few months because of some reason. But, today I want to share a little about the strategic management of information systems in the 21st century. This topic was inspired by my lecturer in MTI UI. So, let’s enjoy your reading … :)

The objectives of this article are as follow:

To understand the evolution of IS/IT role in the organization
To understand the strategic context of IS/IT in an organization (i.e., digital disruptions …)
To understand the concept of IS/IT strategizing

Introduction

Imagine now you are as a CIO in a corporate company. At a BOD meeting, your CEO Group asks you directly ‘what are the strategic information systems that we need to sharpen our competitive advantages in the next 10 years?’ After the meeting was ended, you are asked to do a proper analysis due to the question before. So, what will you do?

Then, in another BOD meeting, your CEO Group decide that the business strategy and strategic orientation was changed. Again, your CEO asks you, ‘How about our information systems and technology? Are they still relevant? We should make an analysis!’

Well.. so what must we do?

Before we discuss further, we must know the definition of IS/IT and Digital. UKAIS (UK Academy for Information Systems) defines Information Systems as the means by which people and organizations, utilizing technology, gather, process, store, use, and disseminate information. It is thus concerned with the purposeful utilization of information technology (IT). IT refers specifically to technology, essentially hardware, software, and telecommunication network. It is thus both tangible (e.g. with servers, PCs, routers, and network cables) and intangible (e.g. with a software of all types). IT facilitates the acquisition, processing, storing, delivery, and sharing of information and other digital content. An application refers to the use of IT to address a business activity or process. ‘Digital’ term has both IS & IT components. Imperative to understand how IS will be leveraged and used as well as the IT capabilities to develop a digital strategy.

Digital Disruption

Nowadays, the are so many digital disruptions. We can see the change from marketplace to market space with the presence of Gojek, Tokopedia, etc. This disruption also blurs the physical or digital dive. Computing resources are preferred over computing infrastructure that GCP or AWS offers. The moving from push to pull economy also disrupt especially the manufacturing company such as Paragon. Data analytics and business intelligence are a must to sustain and maintain the market share. In another way, the company must have an open standard to enable the interconnection of the various system from different companies or vendors.

Latest, the metaverse disruption is going to update the way we live and experience relationships and the environment around us becoming way more than a social platform and network. In Indonesia, Ghozali Everyday phenomenon has attracted public attention lately. Starting from an experiment by uploading selfie photos on NFT, Ghozali was surprised because it turned out that someone had bought it. Ghozali Everyday has taken selfies since 2017 with a total of 933 photos were sold out on NFT.

These disruptions phenomenon becomes an opportunity and also can be a threat to the organization or company. As we know, there are three eras of management activity in an organization.

Data Processing (DP). This management activities era focus on the operating system such as order entry, tracking shipping document, invoicing, cost accounting, stock level, employee record, purchase order, payroll, bill of supply, bill of materials
Management Information System (MIS). MIS focus on control system such as ales analysis, budget control, management accounting, inventory management, quality analysis, supplier analysis, expense reporting
Strategic Information System (SIS), is the ultimate era of management activity. This era focus on strategic system such as sales forecasting, profit forecasting, manpower planning, financial modeling, etc.

Each management activity era above contributes differently to the organization. Data Processing can improve operational efficiency 5–10% by automating information-based processes. Management Information Systems can increase management effectiveness by satisfying their information requirements for decision making. This activity is less consistent improvement and depends on the managers. Strategic Information Systems can improve competitiveness by changing the nature or conduct of business (i.e. IS/IT investments can be a source of competitive advantage).

What is IS/IT Strategy?

Boynton & Zmud (1987) defines IS/IT strategy as an activity directed toward (1) recognizing organization opportunities for using IT, (2) determining the resource requirements to exploit these opportunities, (3) and developing strategies and action plans for realizing these opportunities and for meeting the resource needs. In addition, Earl (198c) defines IS/IT strategy as a long-term, directional plan which decides what to do with IT that is concerned primarily with aligning IS development with business needs and seeking advantage from IT.

Based on the two definitions above about IS/IT strategy, we can summarize that IS/IT strategy is about thinking strategically and planning for the effective long-term management to get the optimal impact of information in all its forms.

The use of IS/IT strategy can be observed in those who share information via technology-based systems with customers/consumers and/or suppliers and change the nature of the relationship [American Airlines — Backend Inventory]; those who produce more effective integration of the use of information in the organization’s value-adding processes [use of ERP, CRM, etc.], those that enable the organization to develop, produce, market and deliver new or enhanced products or services based on information [Merrill Lynch — Cash Management Account], those that provide executive management with information to support the development and implementation of the strategy (in particular, where relevant external and internal information are integrated with analysis) [use of Dashboard, BI, etc.]

In Indonesia, IS/IT strategies can be found in JAKI and Peduli Lindungi Apps.

JAKI — Jakarta’s Super-app (G2C). JAKI — an application developed by the Provincial Government Jakarta, has been chosen as the winner in the public sector category at the national ICT Awards (IdenTIK) and ASEAN ICT Awards (AICTA) 2021. JAKI is one platform for daily needs in Jakarta. From reporting the city’s problems to checking today’s groceries prices.
Peduli Lindungi (G2C). PeduliLindung is a Covid-19 tracking application that is officially used for digital contact tracing in Indonesia. This application was developed by the Ministry of Communication and Information in collaboration with the Covid-19 Handling Committee and National Economic Recovery, the Ministry of Health, and the Ministry of SOEs.

CSFs in IS/IT Strategies

Critical success factors (CSFs) are every bit as important and straightforward as they sound. They are the areas of our IS/IT strategy that are vital to its success. They also give our people focus and ensure that tasks and projects are aligned across teams and departments. The following are the CSFs of IS/IT strategy implementation.

External focus, not internal: looking at customers, competitors, suppliers, even other industries and the business’s relationships and similarities with the outside business world.
Adding value, not cost reduction: although cost reductions may accrue due to business expansion at reduced marginal costs, ‘doing it better, not cheaper’ seems to be the maxim.
Sharing the benefits: within the organization, with suppliers, customers, consumers, and even competitors on occasion!
Understanding customers and what they do with the product or service: how they obtain value from it, and the problems they may encounter in gaining that value.
Business-driven innovation, not technology-driven: the pressures of the marketplace drove developments in most cases.
Incremental development, not the total application vision turned into reality.

Why Have an IS/IT strategy?

This is the last question, why we should have the IS/IT strategy? The consequences of not having the IS/IT strategy are as follow:

Systems investments are made that do not support business objectives.
Loss of control of IS/IT leads to individuals often striving to achieve incompatible objectives through IS/IT.
Systems are not integrated. This can also lead to duplication of effort and data leading to inaccuracy and no coherent information resource.
No means of setting priorities for IS projects/resources and constantly changing plans leading to lower productivity, etc.
Poor management information; It is either not available, inconsistent, inaccurate, or too slow.
Technology strategy is incoherent and constrains options.
Inadequate infrastructure investments made.

IS/IT in The 21st Century

“IT alone is not enough”. IT needs complementary from the human and business resources such as organizational flexibility, integrating business strategy with IS/IT strategy, and maintaining the supplier relationships.