Managing Information Systems - Research Paper Example

With the passage of time as the markets are expanding and globalization is taking place all over the world, Companies are finding it more and more intricate coping with the growing needs of a good organizational structure, plan and strategy. Whether it may be a manufacturing firm, a service provider or a retail chain, All Organizations are now putting in more of their resources in implementing various strategies of gaining a competitive edge over their rivals in the market. Competitive edge or advantage is basically the ability of an organization to outperform other organizations because it produces the desired goods or services more efficiently and effectively than others do. Therefore, businesses follow strategies and conventions that can help them reach and remain at the top of the competitive environment of business. These strategies can encompass what are known as the four building blocks of competitive advantage; superior efficiency; quality; speed, flexibility and innovation; and responsiveness to customers. This paper would discuss the use of MIS in organizations. Starting with the business processes present in most organizational structures, it would analyze and evaluating how, with the help of information systems, the various functions of the business are improved. It would focus upon the importance of information systems in every area of business, but internally and in relation to external environment. Moreover, it would look at how the implementation of MIS in large scale companies such as Dell has drastically improved its performance in terms of efficiency and effectiveness. The paper would also give some future recommendations over the implementation of managing information systems. DISCUSSION An article written by Nicolas Carr, the former, executive editor of the Harvard Business Review and a writer and speaker on technology Business and culture suggests a basic observation by him which is that as time progresses information technology is no more a tool that can help a business gain competitive advantage. He suggests that due to the growing awareness and responsiveness of industries, IT is no longer a remote notion and has now become accessible by any firm that may wish to use it (Carr, 2003) Information technology in a broader sense is referred to as the use of hardware and software to store, retrieve and manipulate information. Servers, operating systems, databases etc come under information technology. Information technology is being used by businesses since almost 5 decades and has evolved drastically with the passage of time. IT is a phenomenon that is on a constant verge of improvement. Newer, better and more efficient changes are taking place that lead in IT becoming more and more expedient, convenient and effective (Kirk, 2009). While IT revolved around technologies in the systems itself, it falls under the large umbrella of information systems. An information system can be anything that is used to create, store, manipulate or circulate information. An information system includes the computers, people, procedures and software that store, organize and deliver information. Information systems are what integrate the business functions and help them work in collaboration. With the help of information systems, all the areas of an organization can keep track of real-time up-to-date information that is communicated simultaneously to all parts of the organization. The availability of real time information helps the business in operating more efficiently and effectively. To understand MIS it is important to first understand how a business works. Most companies have four main functional areas of operation, marketing and sales, supply chain management, Accounting and finance and Human Resources. Traditionally, the organizational structure of businesses has been divided into separate functional areas, and business schools have been organized similarly where each functional area has been taught as a separate course. However, in reality, the better a company can integrate the activities of each functional area, the more successful it will be in today's highly competitive environment. Integration also contributes to improvement in communication and workflow. Each area's information system depends on those of other functional areas. The efficient and effective sharing of data between and within functional areas leads to more efficient business processes. Information systems can be designed to help share data among the functional areas. These systems are called integrated information systems. (Monk & Wagner, 2009) Until recently, most companies had no information systems, and those who did, had unintegrated information systems that supported only the activities of individual business areas. Thus, a company would have a separate information system for marketing; finance and so on, each with its own hardware, software, and methods of processing data and information. This is most commonly known as Silos. These kind of integrated system may work well within the particular functional area but large scale companies, be it in the manufacturing industry or the service industry, in order for a company to achieve its goals, it is imperative that its functional areas share data and work together as without integration, costly inefficiencies could result (Kirk, 2009) Information systems have a diverse range and are available for different uses and implementations. It is essential for organizations to research over the type of information systems that are required to perform the tasks of the business more efficiently. Many organizations deploy Enterprise resource planning systems to help integrate a companies operations acting as a company-wide database to provide consistent real-time information to all areas of the business (Stahl, 2008). Other companies may install management support systems such as Decision support system that supports organizational decision-making, Expert systems that clarify problems and derive solutions for the issues being faced by the management, Artificial intelligence which aims to provide systems with intellectual abilities that would help in differentiating among what is right and wrong based upon a series of factors, Executive information system that takes into account the internal and external factors and helps the management in taking decisions, and Data warehousing which is a tool for reporting. Hence, we can declare that an integrated MIS should be able to provide information across all functional areas of an organization, aid the decision making process across the tiers of management, and help in the administration of business processes. In 2001, in an industry suffering from slumping sales and increasing losses, Dell became the world's largest personal computer vendor. While the industry was facing problem, Dell was continuing to gain market share. The key behind this success is the unique business model followed by Dell. Dell has a direct relationship with customers and sells 90% of its personal computers directly to the customers without any intermediaries involved. This may sound simple but having this kind of a business model is in reality very complex in nature. In order to keep up with the orders in a timely fashion, dell must have an excellent support from information systems that would enable the manufacturing and logistics departments to function efficiently so as to provide the needed inventory at the right time and the right place. Dell is a global company that is operating in 34 countries with over 35,000 employees worldwide. While Dell handles the final assemblies of its products, it does not manufacture its own components (Kraemer & Dedrick, 2002). The manufacturing is organized by region in order to exploit the advantages from different regions. The organization of a global production network is essentially a core feature aiding the success of the company. Dell is a company that is well-known worldwide for its superior value chain and value creating activities. Dells speedy, flexible and lean supply chains are what is at the core of the business and it is what creates a competitive edge for the company. Due to the efficient system and direct relation with customers, when it comes to the information systems that support the supply chain, there is little room for error. The success of Dells differentiating factor in the market lies with the efficiency and operability of its information systems. A problem was faced by dell when its legacy UNIX system database was reaching its limits. This problem was causing lags in the manufacturing process and decreasing productivity. Although most companies face this problem and a common solution is to add another legacy system that would solve the problem for another few years, this was not the case for Dell, as the IT leaders at dell recognized the growing needs for more sophisticated Information system and decided to implement Oracle software. After rigorous evaluation and testing it was decided to implement the system and today dells supply chain has been supported in nearly 10 plants around the world by these Information system that lead to its growing efficiency and agility. To coordinate its manufacturing and component acquisition, Dell coordinates a global production network that spans the various manufacturing areas around the world. A network of Data centers supports Dells various functional areas. These data centers are located regionally as they are adapted according to the local markets. The implementation of various Information systems at dell increased the overall efficiency by a great amount. The solutions are proving to be cost-effective yet proficient. The number of products unit that were not manufactured have decreased by 90 percent while increasing performance by miles. Information system has helped Dell diversify its product range as the management is better able to focus on other products and do more with the same manufacturing capacity. The solutions provide the company with performance, flexibility and scalability and an edge over the market through its unique supply chain activities (Holzner, 2006) With increasing competition, a global mantra for all companies Information system to decrease costs while exploiting the benefits of IT and Information system implementations. Although IT is important for businesses and has great long term benefits, the costs associated with the implementation of these systems in the short run was a huge task for companies including Dell. It has been of top priority for dell to build itself as an efficient enterprise. Dell defines an efficient enterprise as one that implements a completely novel IT environment where the resources are used more efficiently and the culture is more productive and innovative. Dell has deployed a number of software that helps the transmission of information across locations. Dell also has systems such as Dell OpenManage software that acts a monitoring agent. Dell Information system also talked about having solutions that are designed to be open, capable and affordable (Sridhar, 2010) With the help of Information systems forming an integrated supply chain, Dell enjoyed a first-mover advantage in bringing leading-edge components to the industry having newer components than the competitors is the most central edge that technological companies can possess. Dell purchased components on a just in time basis that saved costs of obsolete technologies as it could discontinue buying a certain component if its demand decreased. Radical reduction in inventory due to no stock pile-up reduced financing and insurance costs for Dell. Bypassing the intermediaries and having a direct access for Dell was its key competitive advantage. Dell has an interactive and comprehensive web site along with telephone access, with which it has been able to reduce costs greatly and have closer ties with the customers (Govindarajan & Gupta, 2001). One of the most important things for the success of Dells IT solutions is the well-organized practice of change management. it is believed that a bigger challenge than investing in an Information system is how the company would design a management model that would allow workers to listen, learn, engage, and comprehend what is needed from a strategy, center, and skill viewpoint to remain competitive in the industry (Bob, 2009). in order to implement change it should start from the top management. change begins and remains at the management level which then passes it down to workers. Dell focused on employees as being intelligent and sophisticated hence, followed change management strategies that enforce communication of facts, rationale and discussions. Dell is an exceptional example to observe how a company used information systems and technology to blur the boundaries between the various partners in the value chain. Dell implemented what is known as virtual integration. This concept related to the alliances between the supply chain partners in a way as to make them seem as they are a part of the company itself. Dell outsourced the manufacturing of its components while holding only the final assembly with itself. This was done with the aid of just in time manufacturing and needed a sophisticated technological backbone in order to function properly. However, with the help of this business model Dell was able to benefit from a 360 degree angle. The key element to the success of this business model is speed. The industry is faced paced and the business model requires velocity. This speed can only be achieved if the information management is swift. With a constant flow of real time information in all parts of the organization, Dell is able to keep track of the operations. This faced paced information transfer has been possible with the help of proper MIS in place (Magretta, 1998) Today, most companies conduct at least part of their business operations through electronic commerce. For most large scale companies back-office processing holds great importance. As efficient back-office operation is crucial for any company's success. E-commerce often worsens problems and exposes weaknesses in current back-office systems. Some companies with unintegrated information systems have built websites before creating an integrated back-office system. As a result, those companies often are not able to fill orders in a timely fashion. Recent studies on back-office systems concluded that it is not just an attractive web site that helps an E-commerce business to stay afloat but a conventional back-office system is very important to be in place and operating correctly for the business to flourish. As with any business, effective infrastructure is key for e-commerce success (Monk & Wagner, 2009) FUTURE RECOMMENDATIONS As time progresses, there is more and more investment in Information systems and automation in companies. It is imperative to remain agile in the everyday expanding markets and technologically averse industries. Information systems are costly but they provide an array of benefits in the long run. In today's global environment it is practically impossible for a large scale organization to survive with state of the art methods of working, it is essential for technology to intervene and take over some aspects of the management. MIS leads to long term optimization and if properly implemented and maintained can lead to drastic cost reductions. The real success of IT in a business does not lie in large amount of investments in huge systems. Rather the most vital contributor is the way it Information system integrated in the business practices. Information technology investments need to be aligned with the core business goals. Merely the use of information technology is not enough and would certainly not lead to a gain in competitive advantage. What is most vital is the strategy that is followed by the company. Before rushing into the implementing of information technology in the business, it is very important to understand how this technology will aid in better, faster and more efficient methods that could lead to greater value to the customers. Hence, differentiation and competence is not a result of the large amounts that are invested instead, these should be cut back and focus should be laid on the planning, execution and methods of using the system in the best, more efficient, manner possible. One of the basic challenges faced by Dell is to structure its IT budget and use it effectively. Dell believes that companies should focus on reducing the IT maintenance budgets from 80 percent to 50 percent while increasing the innovation and strategic budget by the 30 percent that is cut down and saved. Although today, the cost of IT and information systems is increasing, it is becoming more and more important to focus upon the consolidation of Information system which would allow the companies to be more innovative while keeping the operations more scalable and more efficient. If the system is not integrated and consolidated, there may be problems that would lead to a downturn in productivity. Although Dell is relatively new as it entered the PC industry in 1985, it has become a global company with global production networks spanning the three major world regions: Americas, EMEA and Asia-Pacific. These networks, which are complex and multi-level, are able to take advantage of capabilities that serve the entire PC industry (Kraemer & Dedrick, 2002) Some companies have more success with Information systems than others. Early implementation of information systems within companies reported that only a low percentage of companies experienced a smooth rollout of their new information systems and immediately began receiving the benefits they anticipated (Cutis & Cobham, 2008). All kinds of software implementations can suffer from delays, cost overruns, and performance problems. Such delays have been a major problem for the Information system industry since the early days of business computing. An example would be the rough rollout of the ERP system implemented by Hershey foods (now The Hershey Company) where they followed what is known as the 'big bang' approach to implementation, in which huge pieces of the system are implemented all at once (Perepu, 2008). Hershey lost a large share of the Halloween candy market that year due to ERP problems from the poor implementation. This approach is discouraged for large companies as it is too risky. Some important future considerations to be taken into account are that the low return on investment from Information system implementation is less related to computer malfunctions than to people and misguided expectations. It is essential to analyze and examine the business processes thoroughly before implementing certain Information system as sometimes executives blindly hope that new software will cure fundamental business problems that are not curable by any software. The root of the problem may lie in flawed core business processes. It is also very important to focus upon employee education and training before the implementation of Information system as the reluctance to change may bring about negative morale from the employees and there may be loss in productivity and employees may feel discouraged if they do not understand how to deal with the new Information system. Gartner research recommends allocating 17 percent of the projects budget for training. Those companies spending less than 13 percent are three times more likely to face problems (Monk & Wagner, 2009). Change management is of key important during the implementation of Information system, managers need to manage the change well so that the implementation goes smoothly and the Information system is comprehensively integrated within the business practices and corporate culture of the organization. The role that the information system plays in the organization must be clearly communicated to the management and the workforce so that the objective is common among the employees. Ownership of the project is also essential as it leads to accountability and better performance (Stahl, 2008) CONCLUSION In conclusion it is important to note that there is no concrete evidence that IT has reached its saturation point and has now started diminishing downwards reminiscent of other machinery or capital goods. There are no boundaries to the growth of software as new features and elements are being invented from time to time that make business practices easier and more convenient. The success that companies had in the past was not due to whether they were using information technology or not, rather it was dependent upon how they actually used it. IT is constantly evolving, especially in businesses. (Fryman, 2004). And as long as organizations are agile and aware about how to integrate information technology with their business strategy then there is no doubt that they will continue to gain competitive advantage through IT. Information technology can therefore continue to provide strategic advantages to organizations when it is used effectively. BIBLIOGRAPHY 1. Bocij, P. & Chaffey, D., (2005) Business Information Systems: Technology, Development and Management in the E-business, Prentice Hall. 2. Carr, N. (2003). IT Doesn’t matter, Harvard Business Review. 3. Clarke, S., (2007) Information Systems Strategic Management: an integrated approach‟. ISBN 978-0-415-38187-1; Routledge Printing, Canada 4. Curtis, G., & Cobham, D., (2008). Business Information Systems: Analysis, Design and Practice, Pearson Education. 5. Govindarajan, V. & Gupta, A.K. (2001) Strategic Innovation: A Conceptual Roadmap. Business Horizons. 6. Holzner, S., (2006) How Dell does it. Mc-Graw Hill Professional. 7. 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Available from http://en.community.dell.com/dell-blogs/Direct2Dell/b/direct2dell/archive/2009/02/05/techknowledge-a-conversation-with-gary-grates-on-change-management.aspx [2 December 2010] 15. Fryman, H., (2004). The future of IT is automation. Available from http://www.cioupdate.com/reports/article.php/3319601 [28 November 2010] 16. Perepu, I. (2008) ERP implementation failure at Hershey foods corporation. ICFAI Center for management research. Available from http://members.home.nl/c.schalkx/Cases%20ARP/ERP%20Implementation%20Failure%20Hershey%20Foods%20Corporation.pdf [2 December 2010] 17. Sridhar, S. (2010) Building an Efficient Enterprise: Achieving Economic Growth through IT. D2D India. Available from http://en.community.dell.com/dell-blogs/d2d-india/b/d2d-india/archive/2010/06/17/building-an-efficient-enterprInformation systeme-achieving-economic-growth-through-it.aspx> [3 December 2010] Read More