The role of information technology in strategy formulation in companies listed at the Nairobi Stock Exchange
Research on IT - strategy integration has been concentrated in developed economies such as US and UK. In the past, a lot of this research has been geared towards the role of IT on improving operational efficiency and financial performance. As the field of strategic management has expanded, strategy researchers and practitioners have shown increasing interest in the role of information technology (IT) in strategic management. This study focuses on the role played by IT in strategy formulation in companies listed at the Nairobi Stock Exchange. Strategy formulation is considered part of the larger strategic management process comprising of diagnosis, setting objectives, formulation, implementation and finally evaluation and control. Information Technology has been discussed in the light of an organizational context. The definition presented for IT is therefore a discussion on its application in business rather than the scientific definition. The study uses an exploratory survey design where the population composed of all companies quoted at the NSE directory as at 1 st August, 2010. Data was collected by means of a questionnaire, which consisted of both open-ended and closed-ended questions where the target respondents were the senior managers in strategic planning, business and the IT function designated as being responsible for planning and managing IT and business resources in the organizations. Data collected was both quantitative and qualitative and analysis was conducted using descriptive statistics, which includes measures of central tendency, measures of variability and measures of frequency among others. The study assesses strategic management praotices in firms and how this is carried out in identifying Information Technology opportunities during environmental. analysis. The opportunities are operationalized under 36 factor scale with each of the factors falling in one of three categories of Competitive, Portfolio and Internal objectives of the firm. The most important opportunities were identified. An overwhelming majority of the firms concede to using formal strategic management practices and to evaluating IT opportunities during environmental analysis. Most of the firms however do not use a structured approach in assessing IT opportunities leading to the possibility of overlooking some dimensions. IT supports the competitive dimension of strategy by proving opportunities for better products or services to customers, by enabling firms to respond more quickly to environmental change and by improving customer relations. IT supports the internal dimension of strategy by providing opportunities for increased volume, accuracy and reliability of data (information) for planning and operations control, operational cost reduction, and enhancing regulatory compliance. Finally IT supports the portfolio dimension of strategy by affording opportunities for portfolio redesign and by raising entry barriers in current industries of operation.