A Strategic Information System can offer competitive advantage to an organization in the following ways:
1) Creating barriers to competitor’s entry: In this strategy, an organization uses information systems to provide products or services that are difficult to duplicate or that are used to serve highly specialized markets. This prevents the entry of competitors as they find the cost for adopting a similar strategy very high.
2) Generating databases to improve marketing: An information system also provides companies an edge over their competition by generating databases to improve their sales and marketing strategies. Such systems treat existing information as a resource. For example, an organization may use its databases to monitor the purchase made by its customers, to identify different segments of the market, etc.
3) ‘Locking in’ customers and suppliers: Another way of gaining competitive advantage is by locking in customers and suppliers. In this concept, information systems are used to provide such advantages to a customer or a supplier, that it becomes difficult for them to switch over to a competitor. For example, an organization may develop its information system and give many benefits to its customers, like reliable order filling, reduced transaction costs, increased management support and faster delivery service.
4) Lowering the costs of the products: strategic information systems may also help organizations lower their internal costs, allowing them to deliver products and services at a lower price than their competitors can provide. Thus such information systems can contribute to the survival and growth of the organization. For example, airlines use information systems strategically to lower costs so that they may counter competitor’s discount fares.
5) Leveraging technology in the value chain: This approach pinpoints specific activities in the business where competitive strategies can be best applied and where information systems are likely to have a greater strategic impact. This model advocates that information technology can best be used to gain competitive advantages by identifying specific, critical leverage points.
Related Articles On Management