‘Why is it important for business strategy to drive organizational strategy and IS strategy? What might happen if business strategy was not the driver?’
Business Strategy is the form by which a business communicates its goals in response to market forces, costumer demands and organizational capabilities. It is important because it sets the firm’s goals, strategies and tactics. Only after these goals are set by general managers, specific strategies (organizational and information approaches) should be conducted, complementing each other. The Information Systems Strategy Triangle shows us the link between these tree forces, where organizational and information systems support the business scheme (proper balance of strategies).
Due to its own characteristics, business strategy is a function in which variables are competition, positioning and capabilities. Information systems helps to determine these capabilities (what the firm can do) and also allows the company to implement its business strategy. Information systems cannot be the driver since to implement information strategy we need to first establish a well-articulated vision of the mission of the firm and the process to achieve it. Organizational strategy will then provide a frame that will indeed define, set up, coordinate and control those processes. If the driver was not business strategy, the other would fail and we (managers) won’t be able to conduct them.
The process of implementing the “Cartão do Cidadão” exemplifies the incorrect balance between the strategic frameworks: Portuguese government decided to create a chipped card which substituted a set of 5 identity cards. That information strategy was implemented but the persons in charge failed to accomplish their business strategy because they didn’t take into account how to get to goals they’re seeking to achieve and so also organizational system failed and was inefficient. Work processes of Organizational Systems didn’t work as expected and such facts are visible in the two examples below:
- There are still companies that don’t have the technology to read the chip;
- The “Registo Civil” and “Conservatórias” aren’t totally computerized yet and the process to gather all information in the only card is taking more than was expected (sometimes more than 6 months).
In the cases where business strategy relies mainly on information systems, business strategy can lose its authority and this will led to a sort of failure exactly on business strategy and in organizational strategy also.
When firms don´t take into account that these strategies should complement each other and that a change in one must change some aspects in other before its implementation, firms can´t achieve success. In other words, when we introduce Information Systems strategies in companies that already deal with it, it is essential to manage business strategy changes efficiently and effectively.
Finally, due to the arguments explained, it is extremely important that business strategy drive both organizational systems and information systems and, in the case it doesn’t, we´ll see lack of success or failures in companies’ processes.