Information Technology (IT) can help organisations to achieve corporate strategy in three different ways (Lucas and Turner, 1982) 1) To obtain greater efficiencies in existing operations 2) To improve planning process 3) To open new market. In order to stem advantages of IT it has to be linked to the business resources. This can be a achieved by a proper Information Systems Planning. An information system strategy (ISS) can be intended to improve core and internally focused efficiency and effectiveness. According to Sinclair it can also be competitive with more strategic focus (Earl 1989 ; Sinclair 1986). Information systems strategy should be dynamic i.e. it should be able to support the current business strategies and respond to strategic and technological changes affecting business (Ward and Peppard, 2002). Please refer diagram 1 in Appendix to study dynamic relationship of information system strategy and competitiveness.
Information System Strategy for Chocoholic
According to Porter and Miller information system strategy (ISS) not only consists of systems used by organisational units to perform individual tasks but also those that helps in gaining competitive advantage along the industry value chain. We will be using Earl’s “three pronged”model for information system strategy development. According to his model in “top-down” approach management attempts to match information systems to business needs. It is aligning of information technology to business’s objectives and goals. The second approach “bottom up” says to improve or exploit the existing systems in order to develop an advantage. While the third approach “inside out” attempts at identifying “new opportunities afforded by IS/IT which may yield competitive advantage or may create strategic options” (Earl, 1989). According to Earl’s model we have three solutions a) ERP implementation b) Exploit Current systems c) Selective Package selection (information systems strategy development and implementation in SMEs by Martin). From the background provided about Chocoholics business, we see that management wants to increase the use of information technology (align IT with business). Visionary owner-manager Louise Purvis has wants to grow her business and is also planning to go global in near future. As per the background provided and Earl’s argument that “the three approaches can be used in parallel different strategies suit different business context”, we suggest a combination of on cloud ERP implementation and Selective package selection approach is suitable for implementing information systems as Chocoholics.
Why combination of on cloud ERP implementation and Selective Package selection?
Since the existing IT infrastructure set up at Chocoholics is very small, it can not be exploited or improved for the growing business and expansion plans. In on cloud implementation ERP services are delivered via software as a Service model. ERP services on cloud can be accessed through a internet browser and has little dependancy on client configuration (http://www.academia.edu/2777755/Benefits_and_Drawbacks_of_Cloud-Based_versus_Traditional_ERP_Systems). SMEs can easy access to specialised and advanced technology and resources by adopting cloud based ERP services and gain a competitive advantage (Benlian and Hess, 2011).
Advantages of cloud based ERP
1) Lower upfront costs: Implementing cloud based ERP systems reduce the expenses incur by the SME organisations (Marston et al. 2010). It also reduces the cost of switching to new cloud based ERP service provider. Adopting ERP via SaaS reduces upfront cost of hardware, software and user licences and does not include training and customisation costs (Grumann, 2011). The upfront cost includes hardware and software for the system, user licence and excludes the training and customisation costs (Grumman 2011).
2) Lower operating costs: Accessing ERP services via SaaS lowers