IT and Strategic Planning and Control

ACCA P5 Advance Performance Management

The role of IT in strategy planning and control:

Rapid innovation in information and technology sector has changed the way of operation of businesses. Every process/functional area within organisation has integrated technology and information systems. However, the impact of information technology to all functions (Check the example table of Porters Value Chain from the article) is not even. Inappropriate use of IT could harm a company’s prospect. E.g. there is little point in automating production if what your customers cherish are hand-made, individualized products. This triggers the need to understand the role of IT in business strategy.

IT and Value Chain Analysis:

IT and SWOT analysis: Understanding possible present and future impact of IT in the business helps addressing needs when defining business strategy. IT is key resource for many of present day organisations and proper management creates competitive advantage for the businesses. Therefore, organisations should identify their internal position (strength and weakness) in integrated IT system and the possible changes that they may face (opportunity and threats) because of changes in IT. There is threshold requirement of IT for every business to keep running or to enter into the business. The threshold keeps changing as IT system advances with time. Therefore, organisation should have a peer review of system changes from time to time.

IT and Porter’s Five Forces:

IT and Porter’s Generic Strategy:

6I’s of business:

Ø  Intelligence- track all activities of customer

Ø  Individualisation – opportunity of online access individually to goods and services

Ø  Interactivity – assist detailed comparison of products

Ø  Integration – easy add marketing and promotional messages

Ø  Independence – possibility to reach customers from any location

Ø  Industry –  change brought to every industrial sector

The criticality of IT – McFarlan’s Grid illustrates current and future dependence on information system

	Strategic impact of future systems
Strategic impact of current system		Low	High
	Low	Support Application that improve management and performance but are not critical to the business	Turnaround Applications that may be of future strategic importance
	High	Factory Applications that are critical to sustaining existing business	Strategic Application that are critical for future success

ACCA Article: The strategic use of IT