Discussion: How Investments are Made

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Discussion: How Investments are Made

Discussion: How Investments are Made

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Strategic Use of Information Resources

Every business decision has risks associated with it. However, with the large expenditure of IT resources needed to create sustainable, strategic advantages, the manager should carefully identify and then design a mitigation strat- egy to manage the associated risks.

Co‐Creating IT and Business Strategy This chapter has discussed the alignment of IT strategy with business strategy. Certainly, the two strategies must be carefully choreographed to ensure receiving maximum value from IT investments and obtaining the maximum opportunity to achieve the business strategy. However, in the fast‐paced business environment where information is increasingly a core component of the product or service offered by the fi rm, managers must co‐create IT and business strategy. That is to say that IT strategy is business strategy; one cannot be created independently of the other. In many cases, they are now one in the same.

For companies whose main product is information, such as fi nancial services companies, it ’ s clear that information management is the core of the business strategy itself. How an investment fi rm manages the clients ’ accounts, how its clients interact with the company, and how investments are made are all done through the management of information. A fi nancial services company must co‐create business and IT strategy.

But consider a company like FedEx , most well known as the package delivery company. Are customers paying to have a package delivered or to have information about that package ’ s delivery route and timetable? One could argue that they are one in the same and that increasingly the company ’ s business strategy is its IS strategy. Certainly, there are components of the operation that are more than just information. There are actual packages to be loaded on actual trucks and planes, which are then actually delivered to their destinations. However, to make it all work, the company must rely on IS. Should the IS stop working or have a serious failure, FedEx would be unable to do business. A company like this must co‐create IT strategy and business strategy.

 

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