We refer to this category of Information systems as. Composite ... Significant advances in computer and .... The directionality of constraints indicates the degree of.
A FRAMEWORK OF COMPOSITE INFORMATION SYSTEMS FOR STRATEGIC ADVANTAGE Stuart E. Madnick Center for Information Systems Research Sloan School of Man ement Massachusetts Institute ofTechnology Cambridge, MA 02139
Y. Richard Wang Department of Management Information Systems College of Business and Public Administration University of Arizona Tucson, AZ 85721
ABSTRACT One important category of strategic applications involves inter-corporate linkage or intra-corporate inte . Applications in this category require mu%$:Zystems to work together. We refer to this category of Information systems as Composite Information Systems (CIS).This paper presents the research issues and directions we have identified to date that may lead to a comprehensive foundation of CIS. With the systems environment in context, we investigate the strategic, technical, and organizational issues involved i n CIS and the correspondin research directions. We are actively building a tieory of CIS based on the research directions we have identified.
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1. Introduction
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Figure 1 A Strategic Applications. Technolom, and OrganizationalResearch Initiative (SATORI)
Significant advances in computer a n d telecommunication technologies have created a wide range of opportunities to meet information needs and to gain strategic advantage. It has become increasingly clear that the identification of strategic applications alone do not result in success for an organization. In fact, a careful and delicate interplay between choice of strategic applications, appropriate technology, and appropriate organizational responses must be made to attain success, as depicted in Figure 1. The challenge is how to develop a n integrated strategic-applications, technology, and organization research initiative to clearly define, articulate, and resolve the issues involved in deploying information technology within and/or across organizational boundaries. This need has been noted by McFarlan[ 131: The IS field requires applied multidisciplinary research ... Deep understanding of changing hardware and software issues and data base structures is needed. Another approach considers how technology can influence a n organization; it includes research on change management and relies heavily on the efforts of organization theorists. ... The use of IS technology to affect channels of distribution, product cost structures, and the nature of products offered has driven this field close to corporate strategy and marketing...
transfer system can not cover that transaction, it will be rejected -- even though that client may have a $1,000,000 active letter-of-credit! This rejection, besides being annoying and ossibly embarrassing to the client, will require signiicant effort to correct by manually drawing on the letter-of-credit to cover the funds transfer. If the bank can tie the three separate subsystems together to access information in concert, so that funds can be automatically drawn on the letter-of-credit, then product-differentiation will be achieved via the enhanced quality of service and reprocessing costs can be reduced since special manual intervention can be avoided.
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Diversity of Situations
It should be emphasized here that the problem is not one involving data alone. Instead, process- or programrelated information also must be selectively retrieved to generate meaningful results. Present-day systems are generally inadequate to handle the scenario described above. Newer techniques need to be developed to allow easy, efficient, and intelligent access to information hosted on heterogeneous systems. Four categories of s i t u a t i o n s r e q u i r i n g s u c h integration have been identified [ll]: 1. Inter-organizational - which involve two or more separate organizations (e.g., direct connection between production planning system i n one company a n d order entry system i n another company).
Consider the electronic banking system, shown in Figure 2, where three separate subsystems are being used for cash management, loan management, and letters-of-credit processing by a U.S. bank. Suppose a client requests that $100,000be transferred to another account. If that client's cash balances in the funds
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MANAGEMENT SYSTEM
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Figure 2 An Electronic Banking System Without Integration
2. Inter-divisional - which involves two or more divisions w i t h i n a f i r m (e.g., corporate-wide coordinated purchasing). 3 . Inter-product - which involves the development of sophisticated information services by combining simpler services (e.g., a cash management account t h a t combines brokerage services, checks, credit card, and savings account features). 4. Inter-model - which involves combining separate models to make more comprehensive models (e.g., combine economic forecasting model with optimal d i s t r i b u t i o n model t o a n a l y z e t h e i m p a c t of economic conditions on distribution).
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ORGANIZATIONAL TECHNOLOGY
Research Purpose Figure 3
Porter [151 found t h a t information technology is changing the rules of competition by: (1) changing industry structure; (2) creating competitive advantage; and (3) spawning completely new businesses. These strategic goals can be achieved only if the underlying technical a n d o r g a n i z a t i o n a l i n f r a s t r u c t u r e c a n s u p p o r t t h e required d e p l o y m e n t . However, a s depicted i n F i g u r e 3 , no e s t a b l i s h e d process o r methodology i s a v a i l a b l e for l i n k i n g s t r a t e g i c applications to appropriate information technology and organizational context. An effective corporation i s one t h a t successfully reconciles the problems and opportunities across these three domains. It is important to recognize that no single pattern of interconnection among these three domains is likely to be consistently successful. Thus, one corporation may wish to lead from its technological domain a n d reconcile t h e o t h e r two d o m a i n s accordingly. In contrast, another corporation may wish to develop i t s s t r a t e g i c a p p l i c a t i o n s f r o m i t s producUmarket choice and develop i t s technological and organizational capabilities accordingly. It is how the corporation successfully m a t c h e s i t s i n t e r n a l capabilities with t h e e x t e r n a l r e q u i r e m e n t s t h a t determines its level of success in the marketplace. O n e i m p o r t a n t category of strategic applications involves inter-corporate l i n k a g e (e.g., tying into supplier and/or buyer systems) or intra-corporate
Need for A Process to Link Strategic Applications, Information TechnoloPy, and Organizational Context
integration (e.g., tying together disparate functional a r e a s within t h e f i r m ) , referred to as Composite Information System (CIS) hereinafter. For the purpose of illustration, the process of linking strategic applications, technological innovations, and organizational contexts is depicted in Figure 4. In this CIS process model, strategic goals are specified based on visions, experiences, and/or theories. Using this specification, appropriate characteristics of a CIS t h a t meets'the strategic goals can be identified. A set of technological and organizational problems associated with each type of CIS is identified and matched with appropriate solutions. In order to perform the matching task more methodologically, it is necessary that The critical strategic goals of a n organization be clearly articulated; The major characteristics of CIS be identified; T e c h n o l o g i c a l p r o b l e m s a n d s o l u t i o n s be investigated; O r g a n i z a t i o n a l p r o b l e m s a n d s o l u t i o n s be examined; and Inter-relationships among strategy, technology, and organization be studied.
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The identification of these conditions has elicited three types of constraints on the development of CIS (historical, future imperfect, and future perfect), a s shown in Figure 5 and discussed below.
Strategic Goals
Historical (A): In this category the individual systems to be integrated already exist and are not expected or able to be changed in the near future; thus constraints are imposed by the past on CIS. Future Perfect (C): In this category, the individual systems to be integrated do not yet exist or a r e assumed to be replaceable; thus no prior constraints are imposed on this type of CIS. I n particular, designers are free to define constraints to impose upon future systems to facilitate integration. This type of process is feasible when we start all systems from scratch and observe the four conditions described above. Future Imperfect (B): Situations A and C represent extremes. In most cases, some systems already exist while others will be developed in the future. A s a result, some historical constraints are imposed. Yet compatible standards for the future are desirable, since when new systems are developed, they will, in turn, impose new constraints on subsequent future systems.
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Figure 4 A Composite Information Systems Model This paper identifies research issues involved in CIS and research directions that may lead to a theoretical foundation. This foundation will provide an important setting for the design and use of CIS. Using the CIS process model illustrated in Figure 4, t h e CIS environment is examined to surface assumptions that organizations may have in developing and/or deploying t h e i r information systems. W i t h t h e s y s t e m s environment in context, we investigate the strategic component, t h e technical component, a n d t h e organizational component of CIS. Section 2 discusses systems environment. Section 3 examines the strategic-management context. Technological obstacles and solutions are detailed in section 4. In section 5, organizational obstacles and solutions are investigated. Finally, concluding remarks are made in section 6.
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