Plugging into Strategic Partnerships: The Critical IS Connection

IN TODAY’S COMPETITIVE WORLD, the effective use of information technology (IT) as an element of a competitive strategy is critical. In the literature there are numerous examples of how organizations have used information technology to build and sustain new relationships with suppliers or customers and, as a result, have achieved a significant competitive advantage.1 A common theme in these examples is the use of information technology to improve coordination of the activities across organizations that are critical to delivering goods and services to a market.

However, it is often noted that these organizations did not gain their advantage by virtue of the information technology alone. Foremost McKesson radically changed both its internal operations and its relationships with customers in an effort to gain a competitive advantage over large, integrated pharmaceutical companies.2 Rockart and Short argue that effective internal integration across value-added functions is a key to interorganizational information systems (IS) implementation.3 Others have noted that the use of information technology linkages between organizations may only “speed up the mess” if a fundamental restructuring of the nature of work in organizations is not achieved.4,5

To the extent that these observations are correct, senior managers must now learn to integrate information technology into every aspect of their organizations.6 One approach to achieving this level of integration has been to decentralize the information systems organization, placing the responsibility for management of the IS function directly under the general manager of strategic business units. Yet this decentralization in itself does not remove the need for effective coordination across the information systems community. In fact, such decentralization may increase the cost of coordination for critical infrastructure components such as telecommunications or data resource management.7

Further, while there are many examples of how investments in technology yielded significant competitive advantage, there are also many examples where such investments resulted in no measurable impact.8 In many cases, this failure appears to stem not from an inappropriate vision but from the inability of the organization to integrate the use and the management of the technology infrastructure into the mainstream of the firm. One key element of a solution to this management challenge is to build a partnership between IS organizations and line managers.

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References

1. J.I. Cash, Jr., and B.R. Konsynski, “IS Redraws Competitive Boundaries,” Harvard Business Review, March–April 1985, pp. 134–142;

J.F. Rockart and M. Scott Morton, “Implications of Changes in Information Technology for Corporate Strategy,” Interfaces 14, No. 1 (1984): 84–95.

2. R. Johnston and P.R. Lawrence, “Beyond Vertical Integration— The Rise of Value-Adding Partnership,” Harvard Business Review, July–August 1988, pp. 94–101.

3. J.F. Rockart and J.E. Short, “IT in the 1990s: Managing Organizational Interdependence,” Sloan Management Review, Winter 1989, pp. 7–17.

4. B.R. Konsynski and A. Warbelow, “Cooperating to Compete” (Boston: Harvard Business School, Working Paper No. 89–02, 1989).

5. The Corporation of the 1990s: Information Technology and Organizational Transformation (working title), ed. M. Scott Morton (New York: Oxford University Press, 1990), forthcoming.

6. J.C. Henderson and N. Venkatraman, “Strategic Alignment: A Process Model for Integrating Information Technology and Business Strategies” (Cambridge, MA: MIT Center for Information Systems Research Working Paper No. 196, October 1989).

7. P.G.W. Keen, Competing in Time: Using Telecommunications for Competitive Advantage (Cambridge, MA: Ballinger, 1986).

8. K. Curley and J.C. Henderson, “Evaluating Investments in Information Technology: A Review of Key Models with Proposed Framework for Future Research,” The ACM/OIS Proceedings on Value, Impact and Benefits of Information Technology (Minneapolis, MN: May 1989).

9. Rockart and Short (Winter 1989).

10. E. Mumford, “Participative Systems Design: Structure and Method,” Systems, Objectives, Solutions 1, No. 1 (1981): 5–19.

11. R. Kling, “Social Analyses of Computing: Theoretical Perspectives in Recent Empirical Research,” Computing Surveys, March 1980, pp. 61–110.

12. M.L. Markus and J. Pfeffer, “Power and the Design and Implementation of Accounting and Control Systems,” Accounting, Organizations and Society 8 (1983): 205–218.

13. D.D. Wilson, “A Process Model of Strategic Alliance Formation in Firms in the Information Technology Industry” (Cambridge, MA: MIT Sloan School of Management, Management in the 1990s Working Paper No. 89–070, March 1989).

14. Johnston and Lawrence (August 1988).

15. R.M. Axelrod, The Evolution of Cooperation (New York: Basic Books, 1984).

16. LW Stern and T. Reve, “Distribution Channels as Political Economies: A Framework for Comparative Analysis,” Journal of Marketing, Summer 1980, pp. 52–64.

17. J. Gardner and M.C. Cooper, “Elements of Strategic Partnership,” in Partnerships: A Natural Evolution in Logistics, Results and Proceedings of the 1988 Logistics Resource Forum, ed. J.E. McKeon (Cleveland, OH: Leaseway Transportation Corporation and The Ohio State University, 1988), pp. 15–31.

Acknowledgments

This research was supported by a grant from the IBM Corporation. The author wishes to acknowledge the contributions of Christine V. Bullen and Jay G. Cooprider.