Strategic information system and benefits

A Strategic Information System (SIS) is an information system that helps an organization gain or sustain a competitive advantage, reduce a competitive weakness, or change its goals, products, services or business processes. It is not defined by technology but by its impact on business strategy. Examples: airline reservation systems, Amazon's recommendation and one-click ordering, FedEx package tracking, ATM networks of banks.

Strategies an SIS supports (based on Porter's competitive forces model)

• Low-cost leadership
• Product differentiation
• Focus on a niche market
• Strengthening customer and supplier relationships (lock-in, switching cost)

Benefits of strategic information systems

1. Competitive advantage - unique services or lower costs that rivals cannot copy quickly.
2. Lower operating cost - automation of processes and efficient supply chains.
3. Product and service differentiation - customization, personalization, value-added services.
4. Customer lock-in - high switching costs bind customers (e.g. online banking, loyalty data).
5. Better supplier relations - integrated ordering and inventory (JIT) with partners.
6. Barriers to entry - heavy technology investment makes it hard for new rivals to enter.
7. Better decisions - accurate, timely information for top management planning.
8. New business opportunities - new products, new markets and new business models (e-commerce).
9. Improved quality and speed - faster response to market change.

A strategic advantage may be temporary because competitors imitate it, so the SIS must be continuously improved.