Information Technology and the Strategic

¶ … information technology and the strategic decision making process, as it is reflected in companied in the given conditions of the business environment they evolve in the beginning of the 21st century. In order to fulfill this task, I intend to emphasize some of the main phases of the decision making process, while analyzing how information technology not only affects and impacts, but may also improve any of these steps

It is obvious that the challenges of the economic world of the 21st century and of globalization are an incentive for companies to try to improve their decision making process and to become more competitive on the market. Information technology appeared as an excellent help in achieving these desiderates. Increased speed in decision making and implementation, combined with the capacity of gathering, interpreting and using large chunks of information and with the possibility of keenly monitoring the evolution of things, all these were brought about by technological developments that the information technology era brought about.

According to a course of introduction to business and management and the University of London, a decision-making process involves several steps. Some of the most important are being "consciously aware of the situation," "recognizing the problem," "gathering information," making the best decision, implementing the solution and monitoring its implementation. As we can see, the decision making process basically involves three main steps: the gathering of information on which the decision will be based, making the best decision, implementing and monitoring its implementation. As we shall describe below, information technology addresses all of these in part.

First of all, gathering the required information is, in my opinion, the most important step in the strategic decision making process. Unless all the right pieces of information are collected, the decision will either be based on false premises or it will be based on insufficient premises and will probably result in its failure when implemented on the market.

The 21st century challenges are characterized, among others, by a strong interconnection and correlation between external environmental factors. The business at home, in the United States or Europe, may be affected by the decision to rise interest rates in Japan or to devaluate a national currency or by a commercial policy that a government decides to introduce and apply.

If we consider that strategic decision making is associated with long-term decisions, many of which can affect all parts and functions of the company, the necessity to be able to gather all the right information and to interpret it well appears fundamental.

This description of the information gathering phase gives out the relevancy and importance if information technology. First of all, the decision makers are in touch with any information across the Globe. Information technology permits the fastest diffusion of information and useful data. Additionally, information technology permits the best organization and storage of data received for its best use.

Based on the information gathered, the strategic decision making process continues with choosing the best decision. This cannot be made with a set of alternative decision that are evaluated. The best evaluation can be done with the help of what-if scenarios. In this case, each scenario/decision in part is facing the actual situation and its post-implementation outcome can be keenly studied. In the end, we are actually facing a virtual experiment in which all alternative solution are considered best decisions and analyzed against existing and future external factors.

The best way to perform these analyses is by using information technology. This is where the speed characteristics of information systems can be considered. As individuals, we find our processing capacity limited, in the sense that there is a limited amount of information we can process and interpret. By using information systems, this becomes practically unlimited. Using information technology in this phase of the strategic decision making process means that you can evaluate the consequences of any of the decisions you have been considering by being able to point out to the benefits and disadvantages in each case. As I have said, the number of scenarios and evaluations you can run is only limited by your own time.

Finally, after the decision is made and implemented, one of the final phases involves monitoring the decision. Monitoring is equivalent to the constant evaluation of the performances and implications of the implemented decision. At any given point, we should be able to say whether the implemented decision has had positive consequences or if things need to be changed.

This means that the monitoring phase also has an important control and feedback component. Monitoring is not enough unless you are able to change some of the factors that have produced unwanted consequences for the company. Again, as previously mentioned, being able to react quickly and correct any of the problems that have appeared is essential, because otherwise the consequences that the company will face are incalculable.

This presentation of the relationship between information technology and the strategic decision making process, as presented previously, can gives us the necessary elements in order to be able to evaluate the advantages of using information technology in the process.

First of all, the basis of competition is determined by the way a company needs how to use information. Information is, indeed, everything. Information technology, on the other hand, helps with everything involved, from gathering information, to storing and later using it in order to achieve the best decisions (as presented in phase 1 of the decision making process).

The impact of information technology on strategic decision making is reflected, as such, on everything from choosing the best supplier to decreasing switching costs. For example, the use of information technology will allow a company to better monitor and manage its supply chain. An excellent example in this sense is Boeing. The company relies greatly on information systems in order to be able to exchange information with its supplier and buyers and to have the necessary parts on due time.

In terms of switching costs, information technology may discover suppliers which bring about a cost benefit that is higher than the switching cost implied. This is possible because the quantity and quality of information that can be handled by using information technology is virtually limitless.

Perhaps one of the most important benefits of information technology and its impact on the strategic decision making process is the added value to products and services in the company's portfolio that can be created with the use of it. This is strictly related to the monitoring phase I have previously described and analyzed. Indeed, the monitoring phase permits not only the best evaluation of a given product or service, in terms of its availability or its quality, but also allows for these mistakes to be corrected. The result is an improved and better performing product.