The strategic dimension of transactional information systems: some organizational implications

Abstract

. Often information systems (IS) are classified in three groups: (a) transactional, used mainly for co-ordination and resource allocation purposes at the operational level of a company; (b) tactical, often employed to support the resource procurement activities typical of middle management; and (c) information systems for strategic decision making, designed to help in the planning and strategy design processes which are the direct responsibility of top management. In general, the amount of care and management attention that companies give to these different types of systems is proportional to their position in this hierarchy: little attention is devoted to the mundane transaction-pushing systems and exquisite care is put into developing the sophisticated decision making aid for the CEO and his/her staff. The IS/IT literature has been reporting quite commonly cases in which companies have attained or lost great competitive advantages by way of their transactional information systems [for example, Emery Worldwide, Baxter Healthcare ASAP system, and Frontier Airlines]. The aim of this paper is to identify actions that companies can take to realize potential benefits of their IS, in particular from their low-level, transactional IS. Among other actions, we will conclude that companies would be better off if they: (a) have the IS department at the right place in the organization, staffed with people knowledgeable about the basic nature of the business in which the company is engaged; (b) are sensible to what can be called ‘strategic maintenance’ of systems, (c) set up a formal procedure for IS planning to ensure coherence between IS plans and business plans, derived, in turn, from business strategy, and (d) keep abreast of the relevant technology. Several examples taken from European companies are used to illustrate these conclusions.