Challenges, strategies and innovation in managing

information systems

Topics Covered

 Information systems (IS) and Information technology (IT)

 IT strategy
 Agile information
 Business process re-engineering (BPR)
 Knowledge management
 Alignment

Reflective Questions
1. Can you think of a real-life example of an enterprise failing to utilize its IT? Why do you
think that was?
2. Think of a successful IT product or platform. What strategy do you think the company
implemented to achieve its success?
3. Think of an enterprise with which you are familiar. Where does it fall on the
capability/opportunity scale (slide 16)? How could its position be improved?
4. What should an enterprise consider when deciding whether to adopt a new enterprise
system?
5. Think on the differences between IS and IT strategies. Can you identify one or the other in
an organization? What aspects did you consider?
6. Were any of the IT strategy terms discussed here new to you? Did you learn something
new about a term you were already familiar with? How has your perspective on those
terms changed?

Talk Citation
Galliers, R.D.(. (2020, March 30). Challenges, strategies and innovation in managing information
systems [Video file]. In The Business & Management Collection, Henry Stewart Talks. Retrieved
August 31, 2020, from https://hstalks.com/bm/1962/.

Publication History

 Published on March 13, 2011

 Updated on March 30, 2020 

Transcript
Slide 1
Hello, todays lecture will cover topic Challenges, Strategies and Innovation in managing
information systems. Well, we can't of course cover all the challenges associated with managing
information systems in organizations in all their complexity, what with all the innovations taking
place. We have been able to bring together experts on aspects of the topic from different parts of
the world, colleagues who have been researching different key elements on the subject matter. I
hope that in doing so, we can unpack at least some of the major strategic challenges and
opportunities.
Slide 2
Organizations spend millions on information technology, on enterprise systems, knowledge
management systems, on outsourcing, and the like. Most recently, we learned of how they've
been betting on big data and artificial intelligence. On digitalization generally, we hear of the
opportunities and amazing benefits to be had and sometimes of the failures and
disappointments. But it's often the case that the information technology in which they've invested
fails to meet business needs or fails to provide the information that managers and their various
stakeholders require. 
Slide 3
Too often, senior executives fail to understand the complexities by their own sides and the
unexpected consequences or leave information technology for someone else to deal with, usually
their IT department or some external service provider, the techies, or simply see the technology as
a necessary evil, something their organizations utterly rely on but is not part of their managerial
responsibilities. This despite the fact that those to whom they may have delegated responsibilities
may well not and entirely understand the particularities of what is after all, their business. 
Slide 4
In a well-known, award-winning Harvard Business Review article some years ago, Nicholas Carr
argued, and I quote, ''IT doesn't matter,'' that information technology had become little more
than a commodity like electricity or the gas supply. And in the same magazine, his Harvard
colleague, Michael Porter wrote another article on a similar topic. This was entitled 'IT and the
Internet'. In it, Porter argued that, ''Unless management was able to harness the technology to
support strategic imperatives in such a way as to distinguish their organization from the pack, then
others that could do so would surely take advantage.'' 
Slide 5
Thus, in Porter's more nuanced accounts, IT itself wouldn't lead to a competitive advantage per se
as implied previously by another Harvard professor, Warren McFarlane, again in a HBR article. No,
increasing commoditization might well be a force for competitive disadvantage. But developing a
distinctive strategy that incorporates opportunities arising from the technological revolution
matters more than ever. IT needs to be incorporated into strategic thinking. In other words, a point
made more recently by Richard Whittington from Oxford University in a commentary published in
the 'Journal of Strategic Information Systems' concerning what has been called the opening of
strategy, which more later. Thus, while organizations are increasingly buying IT systems off the
shelf as it were, so-called Vanilla systems, any advantage that can be had rests in their ability to
harness that technology. As a Chief Executive Officer once said to me, and I quote again, ''I'm not
interested in the plumbing, in the pipes, but in what flows through those pipes, the information.''
Slide 6
But let's think about the technology for a minute. My PhD supervisor at the LSE, Frank Land,
worked on the first business computer. No, not something developed in the 1970s or 1980s and
not in Silicon Valley either. No, the first business computer was the so-called Lions Electronic
Office, the LEO computer, which first ran way back in 1951, built in London for the J. Lyons chain
of tea rooms or corner houses as they were known. But think of it, the functionality and capability
of that large computer taking up as much room as a large office, but far less power than that of
today's mobile phone, something we carry around with us in our back pocket or in our purse. So
this raises a key question. How do we begin to think ahead and come to understand the potential
that information technology can have for our organizations given the rapid advances that are
taking place almost daily? But also, what are the limitations and issues we must become aware of
when we have either little or no experience to guide us? These are the secrets we aim to uncover
in these series of talks.
Slide 7
Focus of this lecture is much more on the process of strategizing, rather than what might be called
strategic planning, which is more concerned with the output of that process. Now, this might seem
strange at first sight, but the point is, that all too often those plans may have been seen as an
endpoint in and of themselves, something that might be produced and left on the shelf, something
we might call shelfware, collecting dust as it were. Since if it is just an endpoint in itself, with few
taking notes, let alone implementing the plan, taking action in other words, then dusty shelfware it
will remain. For the process to be worth the effort, it has to impact the organization in very real
terms and be lived in the day-to-day decisions and operations of the organization. It's an ongoing,
iterative, never-ending learning process in other words. Expect the unexpected and always
assume that there'll be unintended consequences from the introduction of new technologies and
systems. I'm going to introduce a couple of frameworks that can be used in practice as a means of
seeing whether all the bases have been covered when it comes to managing the strategic issues in
utilizing information technology. But before I talk you through these frameworks, let me provide a
little more background.
17:30
As you can see from this slide, I want to talk about a couple of concepts from the academic
literature that are highly pertinent when it comes to IS strategizing, one agility, something we've
already talked about and that Kevin Desouza will cover later in the series, and in much greater
depth than I'm doing now. Second, what Michael Tushman from Harvard terms, and I quote
"ambidexterity". Building on the earlier work of March, Tushman argues that organizations not
only need to exploit their capabilities, including their technological capabilities, but also to
incorporate means of exploring new opportunities, emerging issues, and modes of operation in
their strategic endeavors and daily practices. You will see that the guiding framework I'm
introducing in this talk, owes much to these two concepts. But I'm getting ahead of myself. I first
want to take a long, hard look that some notions, that have become part of our mainstream
thinking in recent years, taken for granted unfortunately, at our cost. I won't exactly review these
notions in anger as it were, but I will certainly critique them and aim to expose their flaws.
18:53
First though, let me define what we mean by agile information systems. This quote is taken from
Kevin Desouza's book, that I mentioned earlier and I'm pausing now so that people can read that
quote.
19:13
Applying this idea to the strategizing process and incorporating exploration in it as well, leads us to
think in terms of a participative process, one that involves key stake holders exploring alternative
futures, identifying the associated information requirements.
19:35
So as I said, we're also going to incorporate some of Tushman's ideas on ambidexterity in the
information systems, strategizing purposes as well. This relates to what Henry Mintzberg talked
about when considering emergent as well as deliberate strategies. Similarly, Lindblom talks of
muddling through, while others like the late Claudio Ciborra for example, talk of bricolage and
tinkering in this regard. In other words, we're dealing here with a combination of hard facts, but
also emerging ideas, trying out new ideas as we go along, seeing or questioning how they impact
our organization.
20:25
So as I said, I want to take a critical look at some of the notions that we may, all too often
unfortunately, take for granted in our discourse on IT management and strategy. I want to do this
with a view to building the case, the guiding framework that underpins these series of talks. So as I
said, I could teach each of these notions in turn, focusing first on alignment and competitive
advantage.
20:56
It seems to go without saying, that an organization should align its IT, with the needs of its
business, whatever that business may be, whether for profit or not for profit, whether in the
private sector or public. Indeed, alignment has been a central plank of strategic information
management for 40 years or more. McLean and Soden talked of the need for a strong
link, between the business and the IS plan, way back in 1977. This has been an issue that various
authors, have returned to ever since. Indeed, if you're interested in learning more about this
topic, there's an excellent review of the literature in the 'Journal of Information Technology' by
Yolande Chan and Blaize Horner Reich and of course, Anna Karpovsky will be focusing on this
topic in her talk as well. Anna and I, also review literature, with a view to identifying the aligning
practices being talked about and this was published also in the 'Journal of Information Technology'
in 2015. The problem here though, is that different authors focus on different aspects of
alignment. What are we supposed to be aligning with what? This could be, as Chan and Reich
pointed out, business and IT strategies, IS and IT strategies, of which more in a minute, IT
acquisitions and business performance, the list is endless. What of the changing business
environment and changing business strategic imperatives? Organizations fall in and out of
alignment because of these dynamics. An article by Sabherwal and colleagues reproduced in the
third edition of the 'Strategic Information Management' book, I mentioned earlier, talks about this
issue. So alignment is a lot more complex than one might first think.
22:54
What of competitive advantage? Take a look, the strategic literature on information technology of
the 1980s and 1990s, even into the 90s, competitive advantage was the hot topic, much like big
data and digitalization these days. IT was going to change the very nature of
competition. Revolutionary change on the back of IT was what was being called for and it led to
the business process re-engineering or BPR movement, with the likes of Michael Hammer, arguing
for blue sky thinking, obliterating in his words, existing business processes rather than merely
automating them. This was, as it was argued, the way to obtain orders of magnitude
improvements.
23:44
But let's take a closer look at this. Remember that Joe Peppard, will be talking about managing
information systems capabilities later in these series. Take a look at this two-by-two, with
capability on the Y-axis and the opportunity to compete on the back of IT on the X. This diagram is
taken from a little known working paper from Harvard Business School way back in 1983. It's not
new thinking, but we seem to have forgotten its message. What this diagram shows is that even
with limited capability, a company may be pretty safe from attack by its competitors if there is
only limited opportunity to utilize IT for competitive advantage. This can be gauged by the extent
of information in the product being produced and in the processes needed to produce that
product. So what if the organization is pretty capable of harnessing IT in these
circumstances? How is it worth exploring new opportunities, even if at first sight, opportunities
appear limited? This is especially the case as technology develops or the business environment
changes. Perhaps there's greater opportunity than first meets the eye. Sure, if the capability is
strong and the opportunities are clearly apparent, then an aggressive business
strategy incorporating information technology seems entirely appropriate. In these circumstances,
it would seem likely that one could provide added value to one's products or services by providing
more information to one's customers, for example. But what if the opportunity is there but the
capability isn't? This is a classic catch-22 situation. You're likely to be damned if you do and
damned if you don't, try and compete on the back of IT and you're likely to come on stuck, as you
won't have the wherewithal to harness the technology at all effectively. Do nothing and you're
likely to come under attack from your competitors, that do have that capability.
25:56
But the advocates of BPR didn't seem to take this into account. Their focus was on changing
business process to take advantage of IT in line with organizational strategy. Remember Hammer's
call to obliterate? Sounds good, but the outcomes of this kind of thinking, BPR became the fad
that got people.
26:19
These were the precise words used by Tom Davenport, one of the leading lights in the BPR
movement in the 1990s. In an article he wrote later in that decade, what BPR advocates had
forgotten about, was that we needed to take into account individual capabilities
and organizational capabilities and the management of change issues associated with this blue sky
thinking. The very structure of the organization and its relationships with other organizations such
as suppliers, for instance, needed to be taken into account, and the point that all this was taking
place in the changing social, economic, and technological environment. But wait a minute. Back in
1965, Theodore Leavitt introduced a model called Leavitt's diagram, and this is illustrated here. So
once again, we had appeared to have forgotten about previous learning in our rush to be seen to
be arguing for innovative solutions. Innovation being a topic that Sue Newell will be focusing
on, in her talk, as I said previously.
27:29
Soon after the BPR movement came onto the scene, we had the emergence of enterprise systems,
enterprise-wide software, in other words; the idea here was the best practices were built into the
software and that enterprise systems suppliers would provide off-the-shelf Vanilla solutions to
meet organizations' needs. Again, the idea here was not only to have best practices inculcated into
that software, but these new enterprise systems would replace legacy systems that would usually
be functionally based and not particularly well joined up with other systems in other functional
areas. The idea was that organizations would improve their efficiency and effectiveness as a
result. Let's stop again for a minute and ask the question, best for whom? Best for when? Best for
where? Is this software going to be best for everyone, irrespective of the organization's particular
orientation, requirements and capabilities? and if best practices are built into the software, why is
it that the providers of a consultancy services in order to implement, operate and actually modify
these systems? Erica Wagner is going to talk about this in much greater detail, but I did want to
raise these questions at this stage, just to give you a feel for some of the concerns that we need to
build into our thinking. One more thing though, might these new systems turn out to be the next
generation legacy systems? and we'll have to deal with these at some stage in the future
too. There are also concerns here about the point that if many organizations are buying the same
or similar software, then presumably this will lead to standardization, convergence, and
commoditization, the very thing that Carr talked about. So where's the advantage to that? Also,
might these large-scale systems actually limit innovation, knowledge creation and knowledge
sharing. Another topic which we will cover later.
29:38
Hot on the heels of the BPR movement came knowledge management. Knowledge was a key
organizational resource. This was the answer we kept hearing about since the millennium. The
idea at first was to counter the negative impacts of BPR. Remember BPR was the fad that took up
people and indeed a large number of middle managers lost their jobs as a result of BPR
exercises. As organizations, we're looking to increase their efficiency and reduce costs by lowering
their headcount. The idea was that we would be able to capture lost knowledge in knowledge
management systems, so that knowledge can be transferred between individuals across groups
and organizational units, even if these were in different parts of the world. Knowledge, therefore
was out there ready to be mined. It could be codified, and of course, best practice would be
introduced into those knowledge management systems solutions. Let's pause again. You often
hear this word "solutions" being mentioned when we talk about IT. But if the solutions, are there, I
often wonder what the question is that they're supposedly answering.
30:51
Take a critical look at this notion of knowledge management. Peter Checkland, formerly
of Lancaster University in the United Kingdom and his work on soft systems methodology has
talked about information and he sees this as information, as data plus knowledge. In other words,
we human beings interpret data using our knowledge so that those data become meaningful. It's
computers that processed data; human beings makes sense of it. In some senses then data are
context-free. Knowledge is tacit according to Polanyi, and Suslensky from MIT, talks about the
stickiness of knowledge. In other words, it's less easy to transfer from one context to another then
some would have us believe. Along these lines, people like Frank Blackler, and Harry Sulcus talk
about knowing in organizations rather than knowledge. When considering knowledge is out
there, how and whether it can be used in different contexts and the processes and practices
involved.
32:06
I want to turn now to information systems and information technology strategies. Very often the
two terms are used to mean the same thing, but I want to make a distinction here. This diagram is
taken from the work of Michael Earl of Oxford University. Earl talks about the information system
strategy as being business driven and demand- oriented. In other words, it's a top-down
approach. While Information Technology Strategy is by definition more technologically focused
and supply-oriented. Supply-oriented in the sense that certain technology exists and is available in
an organization to process data, it's bottom-up in that sense. Thus, the IS strategy is concerned
with what information and IS services are required. While the IT strategy deals with the how
questions, how those IS services and information can be delivered on the back of existing IT
infrastructure, existing applications, and existing service functions and delivery mechanisms. Going
back to terms used by Peter Checkland, the IS strategy is usefully viewed as the desirable strategy,
what's required? While the IT strategy is more about a feasible strategy, what can be delivered
technologically within a certain time period?
33:40
So what does all this mean? I've discussed information systems and information technology
strategy. I have critiqued BPR and enterprise systems and if I've had to go to, at some of the more
popular views of knowledge management, questioning whether knowledge management systems
can indeed help to transfer knowledge quite so easily, while also raising questions about
information technology, competitive advantage, and ongoing alignment. So what have we learned
from this critique? When it comes through IT and IS strategies we need to take into account that
given where you have an existing technological base and a given set of competences, we not only
need to consider what's desirable, but what's actually feasible, and we also need to take into
account how changing information leads, I'll come back to that in a minute. When it comes to
BPR, we need to recognize that we mustn't forget the human and organizational dimensions
and implications; when we consider enterprise systems, we should really question taken-for-
granted notions of best practice, and also with a sub-systems may be a force for standardization
and commoditization rather than innovation, and as for knowledge management systems, well, IT
systems process data and it's humans who apply their knowledge in order to make sense of those
data. This goes with big data just as readily as you'll hear in Wendy Gunther's talk
35:21
So where's all this taking us? We've learned about the dynamic quality of information needs. What
are the implications for us in practice? This dynamic quality leads us to think about formulating
alternative futures or scenarios when thinking about when and how our information needs might
change. Shell International Petroleum Company, was well known for many years for its work on
building future scenarios of parts of its strategising processes. When it comes to IT strategy, that
might lead us to think in terms of exploiting or harnessing the technology and technological skills
and capabilities for competitive advantage. While, IS strategy might lead us to think more in terms
of exploring those alternative futures and potential opportunities. Importantly, the whole thing
needs to be a learning process as I've said this is what I mean by, and the emphasis I place on,
strategising. All these ideas can form the basis for building a coherent information strategising
framework. Before doing so however, let me spend a minute or two on this concept of scenarios
on alternative futures.
36:39
I mentioned Shell previously as an exponent of this kind of thinking. I'll try to explain the process
that one can adopt in developing alternative scenarios using a University as an example. One
approach to this might be to think in terms of facts, heavy trends and issues. The fact of a
University is that it's involved in teaching and in research. A heavy trend might relate to
demographic issues. Perhaps declining high school graduation numbers or increasing numbers of
students from overseas, for example. Both facts and heavy trends can be held fairly constant for
certain planning periods. The University would know with a reasonable degree of certainty what it
was facing. When it comes to issues however, these are by their very nature further certain and
will depend in part on the vision the University senior management has for its future. A Business
School may for example, wish to build or expand its executive education program in addition to its
undergraduate and graduate provision. They may wish to emphasize or de-emphasize gaining
external funding for research. In 2019, UK Universities were considering what the implications of
Brexit might be, for example in terms of student numbers, faculty appointments, and European
research funding. Alternative choices can be made and input into the different scenarios but given
the facts that the facts and the heavy trends will be held constant, there will be certainly some
overlap between the different scenarios for the future. This is illustrated here. Associated
information needs maybe common irrespective of the future while other information will be
required according to one scenario or another. It will be for management to decide what
information is key in any event and what strategy to adopt in the light of this analysis.
38:51
Where's all this taking us? As I said, I wanted to provide you with a guiding framework which can
hopefully help you think in a fairly comprehensive way about IS strategising as an integral part of
organizational strategising. I need to emphasize the point though, that this framework does not
provide you with the answers. What it does do is help you to provide yourself with questions that
should be helpful in Information Systems strategising. You will note first, would you picked IS
strategising in an organization which is itself operating in a series of environments: technological,
collaborative and/or competitive, and socio-political and regulatory to name just these
three? Additionally, IS strategising will involve a kind of deliberate exploitation strategy about
which we talked earlier, but also a more emergent exploratory strategy which would consider
alternative futures and potential opportunities. In building this framework, I wanted to depict a
process which is iterative in nature. One which is very much concerned with ongoing learning
arising from and a review of the impacts of the various strategic decisions that have taken place
both successful and less so. I wanted you to pick something which enabled some knowledge
creation and sharing to take place. Which took accounts of both human and technological
competencies and capabilities. Let's focus on the exploitation strategy first. Here, deliberate
strategy is associated with analyzing the environment and organizational strengths and
weaknesses might come into play. So-called SWOT type analysis might be used here or Porter's
Five Forces approach could be deployed. In doing so, one would deliberately consider the
organization's strengths and weaknesses, as well as its opportunities and threats. Here too, we
would see codified solutions, the kind of knowledge management systems and enterprise systems
of which I talked earlier. Also results from big data analytics and the like. We're likely to have
standardized procedures and rules in place and decisions made about the IS services we provide
for ourselves as well as those that we have gone to the market and looked for in terms of
outsourcing or offshoring. Concerns about the security of our systems and data are also very
much part of this deliberate strategising process. All topics that will be covered in much more
detail later in this series. That's the exploitation strategy. It's very much a deliberate process of
analysis and synthesis, with decisions being made and with reflections taking place on the impacts
being felt as a result of those decisions. I said in earlier remarks that we would be using Tushman's
concept of ambidexterity in building this framework also. Now we need also to focus attention on
the exploration strategy. This is the emergence strategy that Mintzberg introduces. Here we're
talking about reviewing alternative futures and the associated information needs. Learning from
flexible project teams or communities of practice and thinking about how knowledge might span
boundaries across functional areas, different locations, some of which may be situated in very
different parts of the world in major corporations, for instance. Cross-project learning is also very
important in this context too. Something which many organizations struggle with. Additionally
here, using Claudio Ciborra's terminology, we're talking about tinkering with ideas and insights in
order to be innovative. All of this is taking place on a continuous iterative basis. Recall too, as I
mentioned previously, there are likely to be unintended consequences arising from our strategic
decisions. Most certainly as a result of the introduction of new technologies. Sometimes these
may be positive, but we also have to expect the negative outcomes too. As a result, we have to
have this feedback loop in place in order for us to learn from our mistakes as well as our
successes. As I said, this is only a guiding framework. It doesn't provide the answers.
43:36
One further comment I'd like to make with regards to IS strategising is that we could also think of
the use of technology in a kind of organizational crowd sourcing sense. We have last talked about
the role of information technology for the most part, with management decision making in
mind. More recently, however, strategy scholars have been talking about Opening Strategy. What
do they mean by this? Well, you'll learn much more about this in Josh Morton's talk. That brings
these series to an end. But essentially they are seeing how such social media technology as blogs
and intranets more generally might be used to open up the strategising process to include many
more stakeholders than has been the case in the past. Rather than seeing the strategising process
in terms of it being two-way, bottom-up as well as top-down, in this view, the process is multi-
dimensional, with communication and learning taking place across functional areas, locations, and
project teams. With senior managers being open to request for information, explanation and even
criticism from throughout the organization. There isn't time for us to go into this in any detail
in this talk but if you are interested in these recent developments, you may wish to take a look at
the special issue of the journal 'Long Range Planning' that contains a number of articles on this
topic.
45:17
Now let's try to bring this talk to a close by highlighting the key lessons that I'd like you to take
away. Be wary. Be very wary for taken-for-granted notions, the fads and fashions seem to
permeate much of the popular literature on Information Systems Strategy. Take IT, or rather the
management of IT very seriously. This is not something for the technologists alone, but for every
manager irrespective of their seniority or particular focus. Think in terms of exploring as well as
exploiting IT and think too of strategising as a continuous process of learning and trying out new
ideas. Rather than thinking in terms of producing a strategic plan per se, think more in terms of
learning from the unintended as well as the intended outcomes of strategic decisions that are
being made. Sometimes unconsciously as well as consciously, think too in terms of the negative as
well as the positive outcomes. Please, that pains to emphasize, use the framework as a means of
asking questions. Don't for one minute think of it as a solution to the strategising process.
46:36
I hope you found this introductory talk to these series on the strategic issues associated with the
management and use of information technology in organizations very helpful. I've tried to set the
scene for what comes next in the series. Which will take, of course, a much more in-depth look at
the various topics that I've been introducing here. Thank you for listening. I do hope you enjoy the
rest of the talks in these series. Good luck in your studies and in your endeavors more generally.