Information Systems Strategic Management

Learning Outcome:
1.

Candidates should be able to understand and describe the

purpose of Information Systems within different types of
organisation and differentiate between Operational and Strategic
management

Indicative Content:
1.1 Describe the various influences that are likely to determine the culture
and structure of an organisation
It is commonly accepted that no two organisations are ever exactly
the same. Different influences combine to shape the culture and
structure of an organisation and will include both internal and external
factors
The nature of the business activity itself and the resulting skills mix of
the employees will often determine many aspects of the
organisations structure
Location is also a major influence consequent of local employment
laws and practices, proximity to the labour force and the logistics
associated with multi-site or multi-national organisations
Management style will affect the way an organisation operates and
this can be influenced by key individuals within the management
hierarchy or stakeholders such as investors and even the customer
base
1.2 Identify the generic types of information system that are most commonly
used in organisations and suggest what benefits might have been
anticipated from using such systems
Financial management systems accurate and timely financial
reports, indicating the financial status of the business both in the short
and longer term, evaluation against forecasts and models,
comparison with competitors
People management systems (customers, patients, staff, group
members) enabling improved and tailored services to customers,
generating repeat business, up-selling of services and products;
management of staff performance, motivation and compensation
monitoring staff turnover; patient histories and early diagnosis of
problems, subscriptions renewal, etc.
Product management and inventory systems product availability,
stock locations, indexing, product allocations, maximum and minimum
quantities, optimum stock value, stock replenishment, supplier
management

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 Management information systems (Dashboard) monitoring of key

performance indicators
Process control systems threshold monitoring, output monitoring,
resource scheduling, routing, tracking
1.3 Suggest reasons for the failure of some technology-based information
system solutions to achieve their anticipated benefits
The quality of the information being processed is too poor to be of any
significant benefit
The cost of collecting and maintaining the information may be greater
than the benefit that it generates
The technological implementation may have been badly projectmanaged
The solution may have been implemented too late to achieve any
significant advantage
1.4 Explain the key differences between operational management and
strategic management and how this might be reflected within an
organisational structure
Operational management focuses on process-specific routines, linked to a
single sphere of activity within the organisation and with generally
short-term implications. Strategic management has implications for the
organisation as a whole and aims to ensure the longer-term future of the
organisation by optimising resources against outputs and maximising
return on investment

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Learning Outcome:
2.

Candidates should be able to critically evaluate the contribution that

Strategic Management makes to the development and continuing
success of an enterprise

Indicative Content:
2.1

Understand and describe the relationship between business goals and

the development of policies that are needed to achieve these goals
Business goals set out what the organisation is trying to achieve and can
be expressed as specific objectives at corporate and functional levels. At
a corporate level the objectives concern the business as a whole, whilst
at a functional level they focus attention on particular activities such as
marking or customer support. In effect the goals of the organisation are
translated into a set of everyday actions that are governed by company
policies and are monitored to ensure compliance. For example if a
business goal is to deliver outstanding customer service then policies
and standards should be established and monitored that test delivery

2.2

Identify and discuss the environmental and technological influences that

might affect an organisations strategy
The table below lists some possible factors that could indicate important
environmental influences for a business under the PEST headings:

Political/
Legal
Environmental
regulation and
protection

Economic

Economic
growth (overall;
by industry
sector)
Taxation
Monetary policy
(corporate and (interest rates)
consumer)

International
trade
regulation

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Social

Technological

Income distribution
(change in
distribution of
disposable income)
Demographics (age
structure of the
population; gender;
family size and
composition;
changing nature of
occupations)

Government
spending on
research

Labour/social
Government
spending
mobility
(overall level;
specific spending
priorities)

Government
and industry
focus on
technological
effort

New
discoveries
and
development

Political/
Legal
Consumer
protection

Employment
law

Government
organisation/
attitude

Competition
regulation
Political
stability

Economic
mood

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Economic

Social

Technological

Policy towards
unemployment
(minimum wage,
unemployment
benefits, grants)
Taxation
(impact on
consumer
disposable
income,
incentives to
invest in capital
equipment,
corporation tax
rates)
Exchange rates
(effects on
demand by
overseas
customers;
effect on cost of
imported
components)
Inflation (effect
on costs and
selling prices)
Stage of the
business cycle
(effect on shortterm business
performance)
Consumer
confidence

Lifestyle changes
Speed of
(e.g. home working, technology
single households) transfer
Attitudes to work
and leisure

Rates of
technological
obsolescence

Education

Energy use
and costs

Fashions and fads

Changes in
information
technology
(Changes in)
Internet

Health & welfare

Living conditions
(housing,
amenities,
pollution)

(Changes in)
mobile
technology

Learning Outcome:
2. continued Candidates should be able to explain the contribution that
Strategic Management makes to the development and continuing
success of an enterprise
Indicative Content:
2.3 Describe the major elements of strategic management and the
appropriate areas on which to focus
Strategic management is the process of aligning strategies, performance
and business results; it is all about people, leadership, technology and
processes. The effective combination of these elements will help with
strategic direction and successful service delivery. It is a continuous
activity of setting and maintaining the strategic direction of the
organisation and its business, and making decisions on a day-to-day
basis to deal with changing circumstances and the challenges of the
business environment.
The task of strategic management is to direct the continuous processes
of:
maintaining an appropriate relationship between the organisation and
its environment preparing the organisation for an uncertain future
developing and executing approaches for the implementation of the
agenda for strategic change progressing the themes of the strategy
developing, reviewing and monitoring the policies which scope and
constrain management decisions and implementation plans
tracking technology to identify opportunities for innovation
2.4

Explain the importance of relevant information systems in decision

support
The information systems of various kinds, from personnel systems to
process control systems, that might be operating within an organisation
can provide timely access to information, which can be critical in making
strategic decisions. Information can be distributed to various groups and
individuals simultaneously throughout the organisation and can be tiered
through the application of security levels so that sensitive information
can restricted on a need-to-know basis. However, building information
systems that can actually fulfil executive information requirements, even
with the use of critical success factors and other information
requirements determination methods, is still a challenge. Some aspects
of senior management decision-making cannot be fully supported by
information systems because the decisions are too unstructured and

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fluid. Even if a problem can be addressed by an information system,

senior management may not fully understand its actual information
needs. For instance, senior managers may not agree on the firms
critical success factors, or the critical success factors they describe may
be inappropriate or outdated if the firm is confronting a crisis requiring a
major strategic change. Enterprise systems and data warehouses have
made it much easier to provide decision support with data from many
different systems that in the past would have been maintained in silos
and impossible to cross reference. Other systems in this category are
group decision-support systems (GDSS), which support decision-making
in groups, and executive support systems (ESS), which provide
information for making strategic-level decisions. These systems can
enhance organisational performance, but they raise the following
management challenges:
changing management thinking to use the data that is available to
maximum advantage, to develop better reporting categories for
measuring firm performance, and to inform new types of decisions.
Many managers use the new capabilities in DSS and ESS to obtain
the same information as before
management thinking will be required to get managers to ask better
questions of the data
Examiners Tips:
Decision-support system (DSS) Such systems have powerful analytic
capabilities to support managers during the process of arriving at a decision.
The components of a DSS are the DSS database, the DSS software with
models and analytical tools and the user interface.

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Learning Outcome:
3.

Candidates should be able to compare and contrast a range of

techniques used in strategic analysis and explain the value of this
analysis in relation to the development of a strategic plan

Indicative Content:
3.1

Use SWOT Analysis (Strengths, Weaknesses, Opportunities and

Threats) to gain insights into an organisation
SWOT analysis provides a structure by which organisations can
identify any misalignment between its vision of where it wants to
be and the reality of what it is achieving. It provides a framework for
analysing and comparing a range of internal and external
characteristics in a quadrant matrix diagram. A SWOT analysis can
provide a clear basis for examining business performance and
prospects. It can be used as part of a regular review process or in
preparation for raising finance or bringing in consultants for a
review

3.2

Describe how Critical Success Factor (CSF) analysis can influence

strategic planning
A Critical Success Factor is some feature of the internal or external
environment of an organisation that has a major influence on achieving
the organisations aims. Critical success factor analysis is a technique to
identify the areas in which a business must succeed in order to achieve
its objectives. The technique is widely used for determining in detail
where to place the efforts of the organisation, so that it achieves its
vision and strategic goals

3.3

Discuss the nature and relevance of PESTLE (Political, Economic,

Social, Technological, Legal and Environmental) analysis in developing
a business strategy
PESTLE analysis is a technique for understanding the various
external influences on a business Political, Economic, Social,
Technological, Legal and Environmental. The PESTLE analysis
should be used to provide a context for the organisations/individuals
role in relation to the external environment. It covers Political,
Economic, Social, Technological, Legal and Environmental factors.
The factors can be at macro (e.g. World-, EU- or UK-wide) or micro
(e.g. institutional or individual) level. Depending on the scope and
scale of the exercise being undertaken, you may want to consider for
each factor:

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 Which of the below are of most importance now?

Which are likely to be most important in a few years?
What are the factors influencing any changes?
3.4

Explain how Porters Five Forces model is used to identify external

factors that determine the formulation of a strategy
Porters Five Forces model is an excellent model to use to analyse the
particular environment of an industry. So for example, a company
entering the PC industry would use Porters model to establish the
following factors:

Competitive rivalry
Power of suppliers
Power of buyers
Threats of substitutes
Threat of new entrants

The above five main factors are key factors that influence industry
performance, hence it is common sense and practical to find out about
these factors before you enter the industry
3.5

Suggest how Scenario Planning might contribute to strategic planning

Scenario Planning is a model that can be used to explore and learn
about the future in which a corporate strategy is formed. It works by
describing a small number of scenarios, by creating stories how the
future may unfold, and how this may affect an issue that confronts the
corporation. Scenario Planning method works by understanding the
nature and impact of the most uncertain and important driving forces
affecting the future

Examiners Tips:
Royal Dutch Shell, one of the first adopters, defines scenarios as follows:
Scenarios are carefully crafted stories about the future embodying a wide
variety of ideas and integrating them in a way that is communicable and
useful. Scenarios help us to link uncertainties about the future to the decisions
that we must make today.

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Learning Outcome:
4.

Candidates should be able to make recommendations on the formulation

of Strategy at Operational, Business Unit and Corporate levels

Indicative Content:
4.1

Explain the term Benchmarking and how this might be used in the
context of strategic planning
The Benchmarking Process
The objective of benchmarking is to understand and evaluate the current
position of a business or organisation in relation to best practice and to
identify areas and means of performance improvement. Benchmarking
involves looking outward (outside a particular business, organisation,
industry, region or country) to examine how others achieve their
performance levels and to understand the processes they use. In this
way benchmarking helps explain the processes behind excellent
performance. When the lessons learnt from a benchmarking exercise
are applied appropriately, they facilitate improved performance in critical
functions within an organisation or in key areas of the business
environment
Application of benchmarking involves four key steps:

Understand in detail existing business processes

Analyse the business processes of others
Compare own business performance with that of others analysed
Implement the steps necessary to close the performance gap

Benchmarking should not be considered a one-off exercise. To be

effective, it must become an ongoing, integral part of an ongoing
improvement process with the goal of keeping abreast of ever-improving
best practice
4.2

Use appropriate techniques to identify the forces and factors that

determine the formulation of a strategy
Porters Five Forces tool is a simple but powerful technique for
determining where power lies in a business situation. This is useful as
it provides the focus for taking advantage of the strengths exhibited by
an organisation within a given context and highlights the areas that
need to be improved to attain a desired position within a market or
industry sector. Five Forces Analysis assumes that there are five
important forces that determine competitive power in a situation.

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These are:
Supplier Power assess how easy it is for suppliers to drive up
prices. This is driven by the number of suppliers of each key input,
the uniqueness of their product or service, their strength and control
over the sector, the cost of switching from one to another, and so
on. Fewer supplier choices and the more powerful suppliers are.
Buyer Power assess how easy it is for buyers to drive prices
down. Again, this is driven by the number of buyers, the importance
of each individual buyer to a business, the cost to them of switching
from one supplier of products and services to those of someone
else, and so on
Competitive Rivalry assess the number and capability of
competitors if there are many competitors, and they offer equally
attractive products and services, then no one supplier will have
significant power in the situation. If suppliers and buyers do not get
a good deal from one source, they will go elsewhere
Threat of Substitution assess the opportunity for customers to
find an alternative way of doing what a supplier does for them. For
example, if it is the supply of a unique software product that
automates an important process, customers may substitute the
software by doing the process manually or by outsourcing it. If
substitution is easy and substitution is viable, then this weakens the
power of the provider
Threat of New Entry assess the potential for new providers to
enter a market. If it costs little in time or money to enter a market
and compete effectively, if there are few economies of scale in
place, or if there is little or no protection for key technologies, then
new competitors can quickly enter a market and weaken the
position of existing suppliers. If there are strong and durable
barriers to entry, then a provider can preserve a favourable position
and take fair advantage of it
To use this tool effectively, each of these factors must be analysed in
some depth one by one

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Learning Outcome:
4. continued Candidates should be able to understand how to formulate
Strategy at Operational, Business Unit and Corporate level
Indicative Content:
4.3 Discuss the differences between high level and detailed level
analysis
Strategy can be formulated on three different levels:
corporate level
business unit level
functional or departmental level
Corporate level strategy is concerned with the selection of
businesses in which the company should compete and with the
development and coordination of that portfolio of businesses.
At this level it is concerned with:
Reach defining the issues that are corporate responsibilities;
these might include identifying the overall goals of the
organisation, the types of businesses in which the company
should be involved, and the way in which businesses will be
integrated and managed
Managing activities and business interrelationships
corporate strategy seeks to develop synergies by sharing and
coordinating staff and other resources across business units,
investing financial resources across business units, and using
business units to complement other corporate business activities
Management Practices The organisations must decide how
business units are to be structured; through direct corporate
intervention (centralised) or through more or less autonomous
government (decentralised), which relies on persuasion and
rewards. Corporations are responsible for creating value through
their businesses. They do so by managing their portfolio of
business units, ensuring that each is successful over the longterm, developing business units, and sometimes ensuring that
each business is compatible with others in the portfolio
Business Unit Level Strategy
A strategic business unit may be a division, product line, or other profit
centre that can be planned independently from the other business units
of the company. At the business unit level, the strategic issues are less

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about the coordination of operating units and more about developing and
sustaining a competitive advantage for the goods and services that are
produced. At the business level, the strategy formulation phase deals
with:
positioning the business against rivals
anticipating changes in demand and technologies and adjusting the
strategy to accommodate them
influencing the nature of competition through strategic actions such
as vertical integration and through political actions such as lobbying
Michael Porter identified three generic strategies (cost leadership,
differentiation, and focus) that can be implemented at the business
unit level to create a competitive advantage and defend against the
adverse effects of the Five Forces
Functional Level Strategy
The functional level of the organisation is the level of the operating
divisions and departments. The strategic issues at the functional level
are related to business processes and the value chain. Functional
level strategies in marketing, finance, operations, human resources,
and R&D involve the development and coordination of resources
through which business unit level strategies can be executed efficiently
and effectively. Functional units of an organisation are involved in
higher level strategies by providing input into the business unit level
and corporate level strategy, such as providing information on
resources and capabilities on which the higher level strategies can be
based. Once the higher-level strategy is developed, the functional
units translate it into discrete action-plans that each department or
division must accomplish for the strategy to succeed
Examiners Tips:
There is a growing interdependence between business strategy, rules and
procedures and information systems. Changes in strategy, rules, and
procedures increasingly require changes in hardware, software, databases,
and telecommunications. Therefore existing systems can act as a constraint
on organisations, sometimes limiting what the organisation would like to do,
to what its systems will permit

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Learning Outcome:
5.

Candidates should be able to identify the role of Strategic Information

Systems in organisations

Indicative Content:
5.1

Explain the role of Strategic Information Systems in shaping, moulding

and changing goals, operations, products, services and environmental
relationships
At a strategic level Information Systems help organisations gain or
maintain an edge over their competitors. They can influence
fundamentally changes in the goals, operational procedures,
products, services, and environmental relationships of
organisations. Information systems can support strategy at three
levels:
Business Level by achieving product differentiation and focused
differentiation, locking in customers and suppliers using efficient
customer response and supply chain management applications,
significantly lowering their internal costs, allowing them to deliver
products and services at a lower price than their competitors can
provide
Organisational Level by achieving new efficiencies or enhancing
services through combining the operations of disparate business units
and promoting the sharing of knowledge across the organisation
Industry Level providing competitive advantage by facilitating
cooperation with other firms in the industry, creating consortia or
communities for sharing information, exchanging transactions,
coordinating cross-organisational activities

5.2

Explain the significance of Value Chain analysis in assessing the

importance of information within an organisation
Value Chain analysis describes the activities that take place in a
business and relates them to an analysis of the competitive strength of
that business. Information relating to the different activities within a
business forms the basis for determining which activities are core to
the objectives of the organisation. Michael Porter suggests that the
activities of a business could be grouped under two headings:
(1) Primary Activities those that are directly concerned with creating
and delivering a product (e.g. component assembly) or service;
and

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(2) Support Activities, which whilst they are not directly involved in
production, may increase effectiveness or efficiency (e.g. human
resource management). It is rare for a business to undertake all
primary and support activities. Value Chain Analysis is one way of
identifying which activities are best undertaken by a business and
which are best provided by others (outsourced)
5.3

Discuss how Strategic Information Systems might help an organisation

gain and sustain competitive advantage
What activities a business undertakes is directly linked to achieving
competitive advantage. For example, a business that wishes to
outperform its competitors through differentiating itself through higher
quality will have to perform its value chain activities better than the
opposition. Strategic information systems can provide critical support
in determining the areas of the business that require improvement.
For example monitoring customer feedback and repeat business
using a CRM system will provide valuable insight into areas of
operation providing customer satisfaction. These can be contrasted
with other areas of the business that exhibit less positive customer
relationships. By contrast, a strategy based on seeking cost
leadership will require a reduction in the costs associated with the
value chain activities, or a reduction in the total amount of resources
used. Management Information Systems should provide a
mechanism for determining cost reductions. One example of this
would be the decision by a company to switch emphasis from fast
delivery consequent of maintaining high volumes of stock to lower
prices with longer delivery times consequent of only producing
goods to order. Some assessment has to be made by the
organisation as to what its customer base values more, fast delivery
or lower prices

5.4

Discuss the role of management control for the performance of

operational units and the effective and efficient use of resources
Power in an organisation is based on having the authority to take
decisions and the control of organisational resources. These two
management responsibilities are critical in determining the conduct
and outcome of a project. If handled correctly they will contribute
significantly to the success of a project. However, they can also be
used inappropriately to starve a project of necessary resources or to
sanction unsuitable actions leading to project failure. Whilst
appropriate levels of authority are essential in the management of a
project, there should always be some mechanism for verifying
decisions.

Examiners Tips:
Strategic-Level Systems: support the long-range planning activities of senior
management match external and internal environments.

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Management-Level Systems: support the monitoring, controlling, decisionmaking, and administrative activities of middle managers periodic reports.
Operational-Level Systems: monitor the elementary activities and
transactions of the organisation real time data.

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Learning Outcome:
6.

Candidates should be able to assess the strategic importance of

Information Systems Project Management

Indicative Content:
6.1

Demonstrate an understanding of the main stages of Information

Systems Project Planning
Definition stage (requirements analysis, feasibility study,
specification)
Planning stage (system design, task identification, sequencing,
estimating and budgeting, critical path identification)
Organisation stage (staffing, task allocation, establishing
controls)
Execution stage (coding, change management, reviewing, unit
testing, installation, integration testing)
Closing stage (acceptance testing, documentation, sign off,
evaluation)

6.2

Describe the key elements associated with identifying and mitigating the
risks linked to the implementation of strategic information systems
The risks linked to the implementation of strategic information systems
can be grouped under four main headings:
Technical failure the system does not do what was intended either
as a whole or in part, consequent of failure to adequately assess the
requirements and ensure sufficient and appropriately skilled
resources. Whilst technical failure is now less common, it can only be
mitigated against by using appropriately qualified and skilled
personnel throughout the life-cycle of the project
Data failure can be the result of incorrect data analysis, poor data
transposition or errors in data entry. A range of techniques, including
validation and verification, should be used to ensure the accuracy of
data
User failure is often caused by the disaffection of users with the
project and this can be overcome by regular consultation throughout
the project, resolution of users concerns and by providing effective
training
Organisational failure can be due to a misalignment with the
established goals and an inappropriate fit with existing systems. This

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should be avoided through detailed and verified analysis of the

various interfaces that exist between the new system and what is
already in place and will be maintained
6.3

Explain the security implications of maintaining strategic information

systems and discuss the associated legal and regulatory issues
Organisations that maintain information systems have a responsibility for
ensuring that such systems are protected from unauthorised access,
use, disclosure, disruption, modification or destruction. This
responsibility is reinforced through legal and regulatory measures that
apply in most countries and are consistent with legislation such as the
UK Data Protection Act, the EU Data Protection Directive, Computer
Misused Act and EU Data Retention Laws

6.4

Understand the significance of aligning the information system strategy,

organisational strategy and overall business strategy
It is frequently difficult to improve the overall performance of
organisational strategy because the collective goals are unclear.
Employees are often only aware of the aims of their own section, and
regard other parts of the organisation as having a different job.
Individuals are often motivated to do their bit, but lack the overall
understanding of where the organisation is going or how the various
teams are supposed to work together for the collective good

6.5

Explain how this might be achieved using the balanced scorecard

approach
The Balanced Scorecard can help to overcome issues regarding
collective performance by providing a focus that unifies all parts of the
business. It can therefore be a very effective tool for changing the
organisational culture, breaking down the barriers between sections of
the business, creating an overall team culture and thereby improving
overall organisational performance

Examiners Tips:
Implementing the balanced scorecard typically includes four processes:
Translating the vision into operational goals; Communicating the vision and
linking it to individual performance; Business planning; Feedback and learning
and adjusting the strategy accordingly.

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Learning Outcome:
7.

Candidates should be able to understand the extent to which strategic

information systems can affect business processes and impose changes
to organisational structure

Indicative Content:
7.1

Explain the impact that the growth of eCommerce has had on some
traditional business processes and identify some of the new business
models that have developed as a consequence
The eCommerce revolution is epitomised by the following definitions,
which describe on-line relationships:
Business to Consumer (B2C) a business sells a product or
service to a consumer, in some cases producers sell directly to
customers and this is called disintermediation, as exemplified in the
tourism industry. Infomediaries replace sales agents and distributors
in the B2C process
Business to Business (B2B) a relationship between two or
more businesses, not necessarily a buying/selling relationship
may be collaborative. Vertical specialised goods/services
targeted at a single industry, Horizontal goods/services across
industries
Consumer to Business (C2B) consumer drives the buying
transaction, the consumer names a price they are willing to pay,
consumer buying groups are established
Consumer to Consumer (C2C)/Peer to Peer (P2P) consumer
sells directly to a consumer, often second-hand goods, auctions and
classified ads. eBay is perhaps the most obvious example
Business to Government (B2G) relationship between a business
and governing bodies, tax returns, regulatory controls, licensing and
local authority single business rate transactions

7.2

Discuss the human and organisational issues that are associated with
ICT-enabled process change
The Internet and eCommerce has enabled small business to operate in
a global environment, increasing their potential customer base without
significant capital investment in a global infrastructure. Global
businesses have been able to reduce their investment in supporting
infrastructure and staff resources, thereby increasing their efficiency and
cost effectiveness. This has, in a number of instances, resulted in a
distancing between the customer and the supplier, where contact is
limited to an electronic or contact centre interface. It has also changed

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the nature of some employee activities, reducing the demand for some
types of skill and increasing the requirement for others
7.3

Describe in detail how ICT and the Internet have influenced Supply
Chain Management and explain the risks that are inherent in the evolved
business processes
Supply Chain Management (SCM) is the process of planning,
implementing, and controlling the operations of the supply chain as
efficiently as possible. Supply Chain Management spans all movement
and storage of raw materials, work-in-process inventory, and finished
goods from point-of-origin to point-of-consumption. Electronic interfaces
between the strategic information systems of constituent businesses
aligned to a specific supply chain have streamlined the processes of
production, supply and payment. However, this automation between
business can result in increased dependency on a smaller number of
suppliers. Failure of any of the interfaces can lead to delays, over- or
under-production and loss of transactions

7.4

Understand the major elements and stages in a controlled Change

Management process and the various techniques used to ensure a
successful transition
A controlled Change Management process should enable the
organisation to effect the following:
Identify the requirements for change within a project
Put in place a process for submitting Change Requests (CRs)
Determine the feasibility of any changes that have been requested
Formally approve each change before they occur
Schedule change to happen, when the organisation wants it to
happen
Review the impact of each change on the project

Examiners Tips:
eCommerce is commerce in which the transactions are managed through the
use of some form of electronic media. That is, at least part of a transaction is
conducted using some electronic media. Typically, this means that one or
more of the three parts of a transaction is conducted via the Internet or some
other digital media.

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Learning Outcome:
8.

Candidates should be able to understand the importance of knowledge

management for achieving competitive advantage

Indicative Content:
8.1

Explain why knowledge management is an essential element of

strategic management
Knowledge management is the ability of an organisation to capture
and continuously update its intellectual capital and to share it for the
benefit of both internal and external customers. In the past this
knowledge was widely dispersed, in a variety of formats and difficult
to access, but ICT has provided a convenient and fast platform
through which this intellectual capital can be distributed and
analysed. There are three aspects to be considered in relation to
knowledge management, these are discovery, collaboration and
exploitation. Until a few years ago the major problem facing
corporate decision makers was gaining access to sufficient
information to make sound business decisions. The evolution of ICT
has reversed this situation and now the sheer volume of information
available to decision makers is, of itself, a problem. Knowledge
management software is the enabling tool which transforms
information overload into a structured resource for strategic decision
makers

8.2

Discuss the reasons for which knowledge management in

organisations needs to be improved in the era of global connectivity
and proliferated information systems
Global connectivity has widened the customer base for many
organisations, introducing remote management of customers. This has
placed greater emphasis on access to knowledge because the
supplier may not now have expert knowledge of the local environment.
Things that were intuitive, where a direct relationship between supplier
and customer existed, may now have to be simulated through context
sensitive prompting. The availability of such large volumes of
information also makes it necessary that presentation of information to
customers is targeted based on established profiles

8.3

Recognise and describe some of the current knowledge

management technologies
First generation knowledge management technologies relied on
keyword search and Boolean string search capabilities. Examples of
this type of solution were the early Internet search engines. The

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disadvantage of this approach is that all documents containing the

word or words are retrieved and that the words to search on must be
input exactly as they appear in the target document. Another first
generation technology was case-based reasoning, which allowed
the user to start with a question and through a series of selections of
different options, end up with a proposed answer. This involved
considerable effort to be expended in establishing what the
questions and answers needed to be and maintenance of these
paths was not a trivial task. Second generation knowledge
management software relies on natural language processing and
neural networking. This allows users to input the question in any way
they wish, avoiding the need-to-know keywords. Words accepted
through natural language processing serve two functions; firstly, they
form the basis of a conceptual search of all the available knowledge
and, secondly, they are used to confirm the context of the returned
solution. Neural networking technology looks at the question and all
the available knowledge as digital patterns and computes
appropriate matches. The context of the question allows further
refinement, so the user has only to select the most appropriate
answer. This information is then used to educate the software and
that particular answer is given a higher relevancy rating the next time
a similar question is asked
8.4

Demonstrate an understanding of the Knowledge Management

Cycle (create, capture, refine, store, manage, disseminate)
Knowledge management can be depicted as a continuous cycle of
six closely related activities: Creation, Capture, Organisation,
Storage, Management, Distribution. The process begins when
information is created by the organisations actions and processes.
These actions interact with those of other organisations and systems
to alter the environment, generating new information. Planning for
information acquisition has become a complex function. The
fragmentation of organisational activity into pockets of specialisation
has led to a proliferation of information sources and services that
cater to dedicated markets. Sources have to be constantly
evaluated, new sources have to be assessed, and the matching of
sources to needs has to be regularly re-examined. Businesses need
to recognise that the information they are generating has value,
whether it is in a structured, digital form or requires organisation and
transposition so that it can be captured within an electronic system.
Managing the organisations information assets adds real value that
can be exploited. The objective is to create an organisational
memory that is the active repository of the organisations knowledge
and expertise. The volume of data produced and collected needs to
be given structure in ways that reflect the interests and potential use
by the organisation and its members. Information technology can
raise the efficiency and reliability of the organisations operational
activities. Information is packaged into different levels of information
products and services that are targeted at the organisations different

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user groups and aligned to its information needs. Such information

products and services have to add value by enhancing the quality of
the information and improving the fit between the raw information
and the needs or preferences of users. The goal of information
distribution is to increase the sharing of information. Widespread
information sharing optimises organisational learning and creates
new insight and knowledge about difficult problems or situations.
End users should be given the best available information to perform
their tasks, and the information should be delivered through
channels and in a format that dovetails with users work patterns

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Learning Outcome:
9.

Candidates should be able to understand the nature and value of

Business Process Re-Engineering (BPR) and the role of Enterprise
Resource Planning (ERP) within the context Strategic Management

Indicative Content:
9.1

Explain the objectives of Business Process Re-Engineering (BPR) and

describe a suitable methodology
Business Process Re-engineering (BPR) is the radical restructuring of
business processes within an organisation either to streamline the
activity or before applying information technology to make them more
efficient. Organisations often go through BPR simply because they
have to in order to adopt off-the-shelf software packages. However, if
the drivers for BPR are business-related and not software-related, it
can be a beneficial exercise. Particularly if the organisation is planning
to use technology to do something they could not previously do.
The following approach can be used:
develop the business vision and process objectives
identify the processes to be redesigned
understand the opportunities for applying information
technology
build a prototype of the new process
refine plans and build new process and supporting IT

9.3

Recognise the risks of BPR in contrast to cross-functional enterprise

wide resource planning (ERP)
The major risk associated with BPR is the linear approach looking at
processes individually. Within a large organisation BPR may be
affecting only one business unit and the breakthrough gains in
business performance may not be realised because of the focus on
how change will affect jobs, skill requirements, workflows, and
reporting relationships. Fear of these changes breeds resistance,
confusion, and even conscious efforts to undermine the change
programme. ERP software attempts to integrate business processes
across departments onto a single enterprise-wide information
system. The major benefits of ERP are improved coordination
across functional departments and increased efficiencies of doing
business. The fact that ERP applies across the organisation,
reduces the sense of isolation within business units targeted for
BPR, though the same fears for jobs, skills redundancy and altered
reporting lines are likely to persist

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9.4

Discuss ERP implementation issues in building a supportive IT

infrastructure and adopting ERP solutions
There are three commonly used methodologies for implementing ERP
systems
The Big Bang: organisations layout a grand plan for their ERP
implementation and the installation of all modules happens across the
entire organisation at once. The big-bang approach promised to reduce
the integration cost in the condition of thorough and careful execution.
This method dominated early ERP implementations but often contributed
to a high rate of failure in ERP implementation. The premise of this
implementation method is treating ERP implementation as similar to a
large-scale information system, which typically follows SDLC (Systems
Development Life Cycle). But an ERP system is much more than a
traditional information system in the fact that the implementation of ERP
continuously calls for the realignment of business processes. This
method is rarely used today
Modular Implementation: this method goes after one ERP module at a
time. This limits the scope of implementation usually to one functional
department. This approach suits companies that do not share many
common processes across departments or business units. Independent
modules of ERP systems are installed in each unit, while integration of
ERP modules takes place at the later stage of the project. This has been
the most commonly used methodology of ERP implementation. Each
business unit may have their own instances of ERP and databases.
Modular implementation reduces the risk of installation, customisation
and operation of ERP systems by reducing the scope of the
implementation. The successful implementation of one module can
benefit the overall success of an ERP project
Process-Oriented Implementation: the process-oriented
implementation focuses on the support of one or a few critical business
processes which involves a few business units. The initial customisation
of the ERP system is limited to functionality closely related to the
intended business processes. The process-oriented implementation may
eventually grow into a full-blown implementation of the ERP system. This
approach is utilised by many small to mid-sized companies which tend to
have less complex internal business processes

Examiners Tips:
The financial services industry has benefited from extensive re-engineering of
the mortgage application process. By replacing desk-to-desk sequential work
on documents with a work cell approach many people can work on the same
document simultaneously. Workflow management software can be used to
move documents easily and efficiently between different users and locations,
and with careful integration across organisations this workflow can span
multiple organisations in a supply chain.

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