Definition

"Strategic information systems change the goals, business processes, products, services or environmental relationships of organizations to help them gain an edge over competitors." (Laudon & Laudon, 1998, p. 49) In order to be considered strategic, the information system must create a sustainable competitive advantage.

Criteria

There are three ways in which information systems can create a sustainable competitive advantage. Only one need be present for the system to be considered strategic.

• Increase customer switching costs. Provide customers with a system of value to them, but which would cost the customer considerably to switch to a competitor’s system. This serves to lock-in current customers.

• Raise entry barriers to new entrants. Create an information system that is essential within the industry, but which has a high initial cost. The serves to discourage new competitors.

• Change the basis of competition. Utilize IS to change the basis of competition from price to something else. Examples include, in-stock status, speed of order fulfillment, and added information with the product. This allows you to sell on a more profitable basis.

11/8/99 – R. S. Kulzick

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