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The Role of IT Systems in the Strategy Process: A Case Study
Uppsala universitet, företagsekonomiska institutionen.
Linköping University, Department of Management and Engineering, Economic Information Systems. Linköping University, The Institute of Technology.
2009 (English)In: Accounting & Finance Association of Australia and New Zealand 2009, Adelaide samt i Accounting and Management Information Systems International Conference 2009, Bucharest., 2009Conference paper (Refereed)
Abstract [en]

One primary purpose of the strategy process is to establish consensus among managers and employees on a clear direction for the firm’s business (Ocasio and Joseph, 2008). It is therefore a central aim of the strategy process to channel attention and distribute it to areas of special importance for the firm’s competitive strength (cf. Ocasio, 1997). Today researchers are largely agreed that management control can and should be an important element of the structure for this discussion on strategy. The development of new IT systems (ITS) in the last decade, primarily in the form of various enterprise resource planning systems (ERP systems), has helped to open up new possibilities for strategically oriented management control (cf. Piccoli and Ives, 2005).

Almost all ITS are intended to facilitate the collection, analysis, and distribution of large quantities of data. Automation of transaction processing, which requires considerable resources, frees up resources for analysis of internal and external information of strategic and tactical significance (Davenport and Harris, 2007). Although these systems have considerable potential for making management control more strategically oriented, and above all for supporting and facilitating the efforts devoted to strategy, there are few empirically oriented studies on the use of ITS in this important part of the control process. The purpose of our work, therefore, is to increase knowledge and understanding of the role of ITS in the strategy process.

We have chosen to study a globally involved enterprise that has undergone, and continues to undergo, major strategic changes. At this point, six interviews have been held with key participants in the firm’s strategy process – primarily controllers, IT executives, and their equivalents. These individuals represent the corporate group and one business unit. In addition, written materials in the form of newspaper articles, annual reports, and internal presentations have been studied. Based on these sources, there is a description and analysis of changes (1) in the orientation of group and business strategy, and (2) in management control, highlighting the strategy process and the role of ITS in it.

Our findings show that the company has been moving away from a corporate strategy characterized by portfolio management toward one that seeks increasingly to capitalize on synergies through transfer of knowledge and to some extent through activity sharing. At the business unit level there is a clearly growing emphasis on product differentiation, while continuing to give low production costs high priority. The strategy process appears to play a significant part in the changes currently under way. In this endeavor, management seeks to call attention to the following strategically important changes in company operations: (1) a new group perspective, from part to whole; and (2) a new business perspective, from costs alone to both costs and value. The findings show that ITS have played a part in the effort to focus attention on the changes in strategies and management control. It may be noted, however, that the design and use of ITS lag to some extent behind the visions and models communicated by management. For example, many of the routines in the changed strategy process are still manual. Widespread underutilization of the possibilities opened up by ITS is probably one of the main reasons why a more strategic form of management control is a vision rather than a reality in many organizations today.

Place, publisher, year, edition, pages
Keyword [en]
strategy process, management control, IT system, enterprise resource planning system
National Category
Social Sciences
URN: urn:nbn:se:liu:diva-20724OAI: diva2:235794
Ingen tryckt proceeding.Available from: 2009-09-18 Created: 2009-09-18 Last updated: 2009-09-27

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