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Unformatted text preview: See discussions, stats, and author profiles for this publication at: Strategic Information Systems Planning: SMEs Performance outcomes Conference Paper · June 2016 CITATIONS READS 10 316 2 authors, including: Fotis Kitsios University of Macedonia 126 PUBLICATIONS 288 CITATIONS SEE PROFILE Some of the authors of this publication are also working on these related projects: CALL FOR PAPERS - 6th International Symposium & 28th National Conference on Operational Research "OR in the digital era - ICT challenges" View project Entrepreneurial Intentions and Barriers to Entrepreneurship View project All content following this page was uploaded by Fotis Kitsios on 08 September 2018. The user has requested enhancement of the downloaded file. This is a preprint version of the paper. This paper is available at: Kamariotou, M. and F. Kitsios (2016). Strategic Information Systems Planning: SMEs Performance outcomes, Proceedings of 5th International Symposium and 27th National Conference on Operation Research, Athens, Greece, pp. 153-157. [see: ]. Strategic Information Systems Planning: SMEs Performance outcomes Maria Kamariotou, Fotis Kitsios School of Informatics, Department of Applied Informatics University of Macedonia, P.O. Box 1591, GR54006 Thessaloniki, Greece Abstract In this day and age the environment has become more complex and customers’ needs are changing continuously. Businesses are required to respond to these changes. Information Systems (IS) and Strategic Planning contribute to this effort. IS are linked to business strategy, skills, management, decision making and creating competitive advantage. The concept of Strategic Information Systems Planning (SISP) has preoccupied researchers since 1970. SISP aims to support the objectives and strategy of the organization, through IS. Also, SISP aids businesses to innovate, create new products, reduce costs and enhance relationships with customers. The process of SISP includes phases, which are strategic awareness, situation analysis, strategy conception, strategy formulation and strategy implementation planning. Several studies have examined the effect of these phases on SISP success. Other studies have shown that there is a positive relationship between SISP and firm performance. Unfortunately, surveys that have linked the concept of SISP with firm performance have been presented by a theoretical approach. Consequently, the aim of this paper is to investigate the effect of SISP phases on firm performance, to highlight phases that contribute to a greater extent on firm performance and to draw conclusions for the improvement of the process in Greek Small Medium Enterprises (SMEs) which constitute the main component of Greek’s economy. A conceptual model is proposed and it describes the research design process, which is followed in order to achieve this aim. Data are collected using questionnaires to IS executives in SMEs, particularly in North Greece. Data are going to be analyzed using SEM analysis. All variables are measured in a 5point Likert type scale. The questionnaire included variables related to SISP phases and firm performance. KEYWORDS Strategic Information Systems Planning, business strategy, firm performance, Information technology, structural equation modeling 1. INTRODUCTION Information Systems (IS) Planning has been a major research area under investigation since 1980. Businesses use IS in order to compete in a global market, to meet consumer needs and to achieve shorter product life cycles. It is widely accepted that the technology can not be a source of sustainable competitive advantage without the strategic alignment with business strategy (Kamariotou and Kitsios, 2015, Ullah and Lai, 2013). Strategic Information Systems Planning (SISP) is a complex process that includes resources, strategic use of Information Technology (IT) and has specific activities and results (Zubovich et al., 2014). The aim of SISP is to gain competitive advantage (Segars et al., 1998). Nevertheless, researchers have not investigated this relationship yet. Lederer and Sethi, (1996) proposed the impact of SISP phases on competitive advantage for further research. However, researchers focused on examining the measurement of the success of SISP. A significant number of researchers studied the effects of critical factors in the success of SISP (Basu et al., 2002, Yang and Pita, 2014, Zubovic, et al., 2014). Other researchers have examined the relationship between the phases and the success of SISP (Brown, 2010, Newkirk et al., 2003, Newkirk and Lederer, 2006). This is a preprint version of the paper. This paper is available at: Kamariotou, M. and F. Kitsios (2016). Strategic Information Systems Planning: SMEs Performance outcomes, Proceedings of 5th International Symposium and 27th National Conference on Operation Research, Athens, Greece, pp. 153-157. [see: ]. Another important conclusion came from Newkirk et al., (2003), who proposed to investigate the process of SISP in Small Medium Enterprises (SMEs). SMEs are important for national economy, because they support the entire business of a country and they have been negatively influenced by financial crisis. Although gathering information is a difficult process especially for SMEs, it is necessary in order to face financial crisis. The process of gathering information should be strategic. SMEs try to survive in the current turbulent environment. So, be innovative and to achieve rapid growth, it needs to align business and IT strategy. In this view, the purpose of this paper is to propose a framework which will determine the impact of SISP phases on the increase of SMEs’ performance. Specifically, the objective is to determine which phases contribute more and how they can be improved. The structure of this paper is as following: after a brief introduction to previous researches, next section includes the description and the implementation of the literature review methodology which was followed in order to highlight the issues which are discussed in this paper. Then a theoretical framework is analyzed based on the literature review about SISP, firm performance and SMEs. Next section, suggests a conceptual framework, whereas the final section concludes the paper. 2. LITERATURE REVIEW METHODOLOGY The selected methodology was used by plenty of researchers in the field of IS and business management. Three steps are suggested by this selected methodology of literature review to achieve effective implementation of the above. These are: the search, in which the definition of keywords and databases, and the selection of individual topics is analysed, then the "backward search" and finally the "forward search." At the end, the analysis and synthesis of the central ideas of articles follows (Webster and Watson, 2002). Databases and keywords are selected from previous literature reviews on the field of SISP. Databases are Scopus, Science Direct, Web of Science and ABI/INFORM and searching was done with keywords, "information strategy and business strategy alignment", "information systems strategy and business strategy and innovation", "information systems strategy", "business strategy and firm performance", "strategic information systems and planning", "strategic information systems planning and competitive advantage", "strategic information systems planning and firm performance", "strategic information systems planning and innovation", "strategic information systems planning phases" and "strategic information systems planning success". Articles are only in English and are published in scientific journals or conferences, not in books. Articles should have 15 citations, except for articles which have been published in peer-reviewed journals. Having searched all databases, titles and abstracts of the relevant publications were scanned and the citations and references of the residual articles were then reviewed. A total of 88 articles results consist the final sample. Search was completed when it resulted in common articles from all databases and different combinations of keywords. It was then that the critical mass of relevant literature sources was considered as having been collected. Articles were classified in three categories according to their concept. These categories were alignment, firm performance, e-business/internet, Information Systems (IS) resources, Strategic Information Systems Planning (SISP), Strategic Information Systems Planning (SISP) phases, Strategic Information Systems Planning (SISP) success, Information Systems (IS) planning & success, innovation and management commitment. 3. STRATEGIC INFORMATION SYSTEMS PLANNING IN SMES This is a preprint version of the paper. This paper is available at: Kamariotou, M. and F. Kitsios (2016). Strategic Information Systems Planning: SMEs Performance outcomes, Proceedings of 5th International Symposium and 27th National Conference on Operation Research, Athens, Greece, pp. 153-157. [see: ]. SISP is an integrated process which includes specific phases coming from strategic management. These phases are the following five. The first phase is Strategic awareness, which involves the definition of key planning issues, planning objectives, organizing the planning team and the support of top level managers. The second phase is Situation analysis, which includes analysis of current business systems, current organizational systems, current information systems, the current external business environment, and the current external IT environment. Next, the third phase is Strategy conception, which includes the definition of major IT objectives, opportunities for improvement, alternative scenarios, the evaluation of opportunities for improvement and the definition of high level IT strategies. In terms of strategy formulation, businesses select the most suitable scenario from the previous services, according to new business processes and new IT architectures. Also, in this phase, specific new projects and priorities for new projects are identified. The last phase is Strategy implementation planning, which contains the definition of change management approach, action plan, the evaluation of action plan, and the control of the plan (Brown, 2004, 2010, Maharaj and Brown, 2015, Mentzas, 1997, Mirchandani and Lederer, 2014, Newkirk and Lederer, 2006, Newkirk et al., 2008). Table 1 presents the phases with the major activities. In this paper, these phases and activities were used in order to measure SISP. Table 1 SISP phases and their activities Phases Strategic Awareness Situation Analysis Strategy Conception Strategy selection Strategy Implementation Planning Activities Determine key planning issues Determine planning objectives Organize the planning team Obtain top management commitment Analyze current business systems Analyze current organizational systems Analyze current information systems Analyze the current external business environment Analyze the current external IT environment Identify major IT objectives Identify opportunities for improvement Evaluate opportunities for improvement Identify high level IT strategies Identify new business processes Identify new IT architectures Identify specific new projects Identify priorities for new projects Define change management approaches Define action plans Evaluate action plans Define follow-up and control procedures Researchers have measured firm performance out in variables such as sales growth, profitability (Bergeron et al., 2004, Croteau and Bergeron, 2001), sales growth, profitability, innovation (Andersen, 2001), cost reduction, quality-improvement and revenue-growth (Oh and Pinsonneault, 2007), improvement internal efficiency of operations, growth of customer satisfaction, growth of ROI, growth of market share of products and services and growth of annual sales revenue (King and Teo, 2000), ROA, sales, growth and profitability (Chatzoglou et al., 2011). In Europe at about 75% of all businesses are family ones. Family businesses rather incline to pay attention on the business’s long-term sustainability than perceiving short-term profitability (Siakas et al., 2014). Family firms are significant, both because they make a substantial contribution to the national economy, but also because of the long-term consistency they achieve, the liability they display and the values they This is a preprint version of the paper. This paper is available at: Kamariotou, M. and F. Kitsios (2016). Strategic Information Systems Planning: SMEs Performance outcomes, Proceedings of 5th International Symposium and 27th National Conference on Operation Research, Athens, Greece, pp. 153-157. [see: ]. represent. Greece is a country which has enormous number of SMEs businesses comparatively with other countries of the European Union and most of them are family businesses (Vassiliadis and Vassiliadis, 2014). The current financial crisis has negatively affected a huge number of activities and the majority of family businesses found themselves in a new complex financial environment where uncertainty prevails and the market characteristics are radically inverted. Except for difficulties in their financial aspect, their relative lack of technological, managerial and human capabilities may limit their ability to bowl over the financial crisis (Bourletidis et al., 2014). It seems that formal processes in SMEs which are related to strategic management and information handling expedited checking and coordination and supported managers to pay attention to strategies, structures and processes that were likely to increase firm performance. In unsettled environments, businesses incline to formalize processes using standardized rules and procedures which help the reduction of environmental uncertainty and prepare for stability. It seems that formalization supports the development of constant frameworks that accommodate communication among the individuals and sharing of new information, and provides through the inflicted structures the transformation of new ideas into real plans accordingly, raising innovation (Giannacourou et al., 2015). In this view, Mirchandani and Lederer, (2014), used SISP phases and they found that as the environment becomes more uncertain, more situational analysis is needed. The analysis of current business systems, organizational systems, information systems, business environment and the external IT environment permit the organization to identify problems and diagnose opportunities. 4. METHODOLOGY Figure 1 shows the conceptual framework suggested by authors. This framework has been developed on the basis of the existing literature. Its aim is the creation of a framework, which fulfils two important topics that their linkage constitutes a challenge for further investigation. A total of hypotheses is going to be examined through the data analysis. Firstly, strategic awareness has positive impact on firm performance. Second, situation analysis impacts firm performance positively. The third hypothesis claims that strategy conception has positive impact on firm performance. According to the fourth hypothesis, strategy selection impact firm performance positively. Finally, strategic implementation planning affects firm performance positively. Based on previous surveys, a questionnaire with two scales and 28 questions was created in order to evaluate the variables from the conceptual framework. Answers are measured with a 5 point Likert scale. Also, the first part of the questionnaire includes questions about responders’ industry, gender, age, education level, experience, number of employees, turnover, number of IS employees and IS budget. A sample of IS executives was selected from the icap list. The selected companies should have more than 50 employees and provide contact details. Authors called 173 IS executives and collect their emails in order to send the questionnaire. 123 of them accepted to participate in the survey. Data analysis will be implemented with Structural Equation Model analysis (SEM) because of its ability to impute the relationships among unobserved constructs (latent variables) from observable variables. Figure 2 Conceptual Framework This is a preprint version of the paper. This paper is available at: Kamariotou, M. and F. Kitsios (2016). Strategic Information Systems Planning: SMEs Performance outcomes, Proceedings of 5th International Symposium and 27th National Conference on Operation Research, Athens, Greece, pp. 153-157. [see: ]. 5. CONCLUSIONS So far limited academic studies have focused on the impact of SISP phases on firm performance. This study proposed a framework to suggest a formal process which will be followed by IS executives and managers in order to plan and use the right IS and to increase competitive advantage. The authors contribute to the existing surveys by raising IS executives awareness of the strategic use of IS planning in order to achieve competitive advantage. A limitation of the model stems from the fact that it has not been tested yet. Nevertheless, the results of an exploratory study will be summarised in an improved conceptual model for further research. This study is made for SMEs. Future researchers could investigate and compare these results with relative ones from big companies. Apparently, future researchers may use different methodologies for data analysis. REFERENCES Andersen, T.J., 2001. Information Technology, strategic decision making approaches and organizational performance in different industrial settings. Journal of Strategic Information Systems, Vol. 10, No. 2, pp. 101-119. Basu V., Hartono E., Lederer A.L., Sethi V., 2002. The impact of organizational commitment, senior management involvement, and team involvement on strategic information systems planning. Information & Management, Vol. 39, No. 6, pp. 513-524. Bergeron F., Raymond L., Rivard S., 2004. Ideal patterns of strategic alignment and business performance. Information & Management, Vol. 41, No. 8, pp. 1003-1020. Bourletidis K., Triantafyllopoulos Y., 2014. SMEs Survival in Time of Crisis: Strategies, Tactics and Commercial Success Stories. Procedia-Social and Behavioral Sciences, Vol. 148, pp. 639-644. Brown I., 2010. Strategic Information Systems Planning: Comparing Espoused Beliefs with Practice. Proceedings of 18th European Conference on Information Systems (ECIS). Pretoria, South Africa, pp. 1-12. Brown I.T.J., 2004. Testing and Extending Theory in Strategic Information Systems Planning Through Literature Analysis. Information Resources Management Journal, Vol. 17, No. 4, pp. 20-48. Chatzoglou P.D., Diamantidis A.D., Vraimaki E., Vranakis S.K., Kourtidis D.A., 2011. Aligning IT, strategic orientation and organizational structure. Business Process Management Journal, Vol. 17, No. 4, pp. 663-687. Croteau A.M., Bergeron F., 2001. An information technology trilogy: business strategy, technological deployment and organizational performance. Journal of Strategic Information Systems, Vol. 10, No. 2, pp. 77-99. Giannacourou M., Kantaraki M., Christopoulou V., 2015. The Perception of Crisis by Greek SMEs and its Impact on Managerial Practices. Procedia-Social and Behavioral Sciences, Vol. 175, pp. 546-551. Kamariotou M., Kitsios F., 2015. Innovating with Strategic Information Systems Planning: A Structured Literature Review. Proceedings of 2nd International Conference on Applied Innovation. Arta, Greece (accepted). Kamariotou M., Kitsios F., 2015. Information Systems Phases and Firm Performance: A conceptual Framework. In: Springer Proceedings in Business and Economics, Proceedings of 1st International Conference on Business Informatics and Modelling. Online, Global (accepted). King W.R., Teo S.H.T., 2000. Assessing the impact of proactive versus reactive modes of strategic information systems planning. Omega, Vol. 28, No. 6, pp. 667-679. This is a preprint version of the paper. This paper is available at: Kamariotou, M. and F. Kitsios (2016). Strateg...
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