Faculty of Business, Economics and Public Policy University of Brunei Darussalam Negara Brunei Darussalam Semester II (2011/2012) Module Title: Management Information System (BB5107) Coursework: How can IS/IT help my Organization? A coursework submitted in partial fulfillment of the requirements for the degree of Masters of Business Administration (MBA) Name| Hj Mohd Shril Hj Matsawali| Registration No. | 11M0030| Programme| Master of Business Administration| Lecturer| Dr Hj Mohammad Nabil Almunawarah| Deadline| 15th April 2012| ————————————————- Abstract
This research approaches the issues on role of Information System and how it help organizations, with the aim of finding some conditions that make the organizational context able to manage the change process needed to really get the potential benefits of these technologies. This paper will further explain the process, types, benefits and how to ensure effective implementation of information system. Introduction In any business organization, data is the most important thing. Different type of information is produced from data. When the amount of data is large, it becomes more difficult to process this data manually.
In order to get quick results and timely information, an Information System is used in almost all organizations. Information Systems (IS) development raises many important challenges to organizations. Nowadays, depending on the type of organization, to some extent business processes are supported by some kind of IS. It is not unusual to have in some organizations information and procedures islands lacking from a desirable integrated access to information. Managers are increasingly recognizing the competitive and strategic value of information systems.
It has been considered that information is the most valuable assets in any organization apart from its personnel, financial capital, plant and equipment because it describes these physical resources and the environment in which they exist. Owning and upgrading their information system is now not an option in this technology-driven era; it is a requirement because organization that use an up-to-date information system to gather, assimilate, and evaluate internal as well as external information are gaining competitive advantage over other firms.
What is an organisation? Organization is a social unit of people, systematically structured and managed to meet a need or to pursue collective goals on a continuing basis (http://www. businessdictionary. com). An organization is a stable, formal social structure that takes resources from the environment and processes them to produce outputs. (http://phaariz. files. wordpress. com/2010/03/laudon-feature-3. pdf)
They are also bureaucracies with clear-cut divisions of labor and specialization and arrange these specialists in a hierarchical manner in which everyone is accountable to someone and authority is limited to specific actions governed by abstract rules or procedures that must abide by laws. The organization is devoted to the principle of efficiency: maximizing output using limited inputs. Other features of organizations include business processes, organizational culture, organizational politics, surrounding environments, structure, goals, constituencies, and leadership styles.
Organization is also considered to be an information entity (Lucas H. R. Jr (1994). This means that organization collect and assemble data from number of sources. Data is considered by scholar to be streams of raw facts representing events occurring in organizations or the physical environment before they have been organized and arranged into a form people can understand and use which is usually called information. Information is data that have been shaped into a form that is meaningful and useful to humans. The information however was viewed as an unfortunate, costly by product of doing business – simply “red-tape” (Laudon K.
C, & Laudon J. P. 1995). Thus, all of these features surrounding the organization must be acquired and analyzed and this affects the kinds of information systems used by organizations. How organization work traditionally before IS It is important to first understand how organization operates traditionally way before information system is introduced before it can show and compare how information system improve and help organisation. Under the old paradigm, the firm was governed by a relatively rigid functional structure inhibits cross-functional information flows.
One of the other key problems identified in conventional organisation is working in silos. Silos are organisational units where there is a breakdown in communication, co-operation and co-ordination with both internal and external parties. In a paper quoting a 2003 Survey on Leadership Challenges by the American Management Association, Florence Stone notes that: “….. getting people who have different agendas to work together is amongst the biggest obstacles facing business today” (Stone, 2004, p 11 cited at Fenwick et al p. ). In a recent paper Conrad Guelke notes that “…. organisational parochialism is characterised by a lack of co-operation between [and within] agencies. In a corporate environment where decision-making is being increasingly “unbundled”, and business unit fiscal performance is the priority, the values of teamwork and co-operation are often neglected” (Guelke, 2005, p 749 cited at Fenwick et al 2009 p. 3). Most organisations and organisational units will have some silo characteristics at any given time.
But silos become problematic when they are develop to a point that good performance suffers. The challenge is to indentify silos that are problematic or that threaten to become so, and to identify and take remedial steps. One of the ways to overcome this problem is by the setting up an information system in the organisation. What is Information System? An information system is a set of organized procedures that, when executed, provides information to support the organization (Lucas H. C. Jr 1994). According to Laudon K. C. et al. 1995), an information system is a set of interrelated components that sense, communicate, analyze, and display information for the purpose of enhancing perception, understanding, control and creative ability. Alter S. (1991) however argued that information system is a combination of work practices, information, people, and information technologies organized to accomplish goals in an organization. Information systems (IS) are sets of components that are organized in a way that supports the execution of some function(s) (The Institute of Electrical and Electronics Engineering IEEE, 1990 cited at Obeng S. 010). Nickerson (2000) does not limit the components to being only technical – such as computers and code – but sees that the people, the processes, and the information are also parts of an information system. Therefore it can be said that an information system is a system that provides management and other personnel within an organization with up-to-date information regarding the organization’s performance; for example, current inventory and sales. Thus, it is important to understand the relationship or role of information ystem in any organization and how it would directly help them. An IS system isn’t just a collection of hardware and software, it’s much more than that, it’s a tool. This tool can be used in a number of ways, and the value of it really depends on how a business opts to utilize it (Goessl L. 2008). Information systems are rarely innovative or ‘out of the box’ business solutions. However manager will not be able to design new systems successfully or understand existing systems without understanding your own business organization. Relationship of Information System with Organization
All businesses share one common asset, regardless of the type of business. It does not matter if they manufacture goods or provide services. It is a vital part of any business entity, whether a sole proprietorship or a multinational corporation. That common asset is information. The amount of information in organizations is heavily increasing and it has become vitally important to efficiently manage and share information inside the organization (Anna, 2009 cited at Obeng S. 2010). Information enables us to determine the need to create new products and services.
Information tells us to move into new markets or to withdraw from other markets. Without information, the goods do not get made, the orders are not placed, the materials are not procured, the shipments are not delivered, the customers are not billed, and the business cannot survive. Information is considered to be the lifeblood of any organization (http://wiki. answers. com). It has far lesser impact when presented only as raw data. On the other hand damaged or lost data due to unorganized can cause disruptions in normal business activities leading to financial losses, law suits, etc.
Companies have to be shifted in adopting new technology in order to remain competitive in a continuously developing business environment. This is where information systems (IS) come into play. In other words in order to maximize the value of information, it must be captured, analyzed, quantified, compiled, manipulated, made accessible, and shared through an information system (IS). It must be designed, developed, administered, and maintained which suits organizational needs and requirement. Information systems are organizational subsystems that perform ork related to information (Lucas H. C. Jr (1994) p. 52) Companies and other organizations are investing great sums in introducing information systems in the organization hoping to be able to make business more efficient and information sharing smoothly (Anna, 2009 cited at Obeng S. 2010). A sophisticated computer information system enables companies to monitor employees, to keep managers and employees informed, to coordinate activities among divisions, or even to sell their products to customers via the internet.
Moreover, in the era of information technology like this, information has become valuable organizational asset just like human resources and inventories. Furthermore, a good information system can facilitate direct communication between firm and suppliers, manufacturers, dealers, and marketers. Together, they can create a value chain as though they were in one organization (Axos 2008). Information systems, which comprise hardware, software, data, applications, communication and people, help an organization to better manage and secure its critical corporate, customer and employee data.
Information systems also improve integration and work processes and organization can gain continuous benefits. An information system can be a mainframe, mid-range or network computer concept that allows distributed processing for a group of users accessing the same software application. These systems provide management with control over their data, with various tools to extract data or view data structures and records. The role of an information system is to foster a data management environment that is robust and can be expanded according to an organizations’ strategic plan for information processing.
An information system also satisfies diverse information needs in an organization Roles of Information System in an Organization One reason information system plays such an important role in organization and affect so many people is the soaring power and the decline on cost of computer technology. Organization nowadays can use powerful communication networks to access different locations around the world and coordinate activities across time and space. These networks are transforming the shape and the form of business enterprises.
This report will not look into detail on the network used, instead will be focusing on the role and the capability of information system which required the organization to redesign, transform structure, scope of operations, reporting and control mechanisms, work practices, work flows, products and services (Lo P. 2005) Information system can flatten organizations which mean it can reduce number of employees and management levels. In other words, organization can reshape and retrench employee who is in redundancy and no longer need some of the positions.
Thus, it reduces the number of levels in an organization by providing managers with information to supervise larger numbers of workers and by giving lower-level employees more decision-making authority. Team members can collaborate closely even from distance locations which means that the management span of control also been broadened. This means managers can manage and control more workers spread over greater distances. Through information system it is now possible to separate work from location and they can organize globally while working locally by the usage of e-mail, internet, and video conferencing.
According to Laudon K. C. ; Laudon J. P. 2000, it can link people, assets and ideas to create and distribute products and services without being limited to traditional organizational boundaries or physical location and hence enabling different companies to join together to provide goods and services without physical linkage. It can also help to reorganize work flows and processes and have been progressively replacing manual work procedures with automated work procedures. It allows organization to cut costs significantly through displacing paper and manual routine as well as improving customer service.
Redesigned workflows can also facilitate organization efficiency and can enable new organizational structures, products and services. Information system can increase flexibility to both small and large organizations by increasing their ability to respond to changes in the marketplace and to take advantage of new opportunities. It enables transactions such as payments and purchase orders to be exchanges electronically among different companies, thereby reducing the cost of obtaining products and services from outside the firm. Organization can share business data, catalogues or mail messages through such systems.
It can create new relationships between organization, its customers and suppliers because information system automates the flow of information across organizational boundaries (Laudon K. C. ; Laudon J. P. (2000). Information System concepts Laudon K. C. ; Laudon J. P. (1995) p. 6 stated three common activities in an information system produce the information organizations need for making decisions, controlling operations, analyzing problems and creating new products or services. Input is the raw data from the world around us (Laudon K. C. et al (1995) p. 2). In other word input captures or collects raw data from within the organization or from its external environment. For example, Customers information, organization’s products and services, internal operations, competitors and all the external data on the economy, markets etc. Processing entails converting this raw data into a useful form which means that computers are used to store data and then manipulate, rearrange, and analyze this data according to a set of instructions called a program or software. The result of processing on the other hand is called output.
Output entails displaying information to users which means that it transfers the processed information to the people or activities where it will be used. For example, many organizations would want their information to be disseminated and shared to the external parties which include the public, stockholders, government and etc. Types of Information Systems in organization Information systems must be sufficiently flexible to meet the needs of users at different levels in an organization. Facilitating the input, processing and output as mentioned earlier requires the use of several different types of information system.
Thus, there are different types of information system used in organization. These include transaction processing systems, management information systems, decision support systems and executive information systems. Transaction Processing Systems (TPS) – Transaction processing systems help production workers to process transactions. Transaction means an event surrounding the production, distribution, sale and transportation of goods and services (Laudon K. C. et al 1995), cash deposits, payroll, credit decisions and the flow of material in the factory (Laudon K.
C. ; Laudon J. P. 1995). The powerful feature of TPS is their ability to record routine and well-structured processes (Rowley J. 1996). It also helps to record sales, inventory or financial data. For example if an item were sold, the transaction processing system would ensure that the sale was posted in the sales journal and later when the invoice is raised to the accounts receivable file and to the inventory records. Output would be a printed list of detailed monthly statements for customers or a screen display of the stock levels of items in stock.
Management Information System (MIS) – Management information systems support managers in making decisions and to produce meaningful reports for managerial use (Rowley J. 1996). The purpose of this system is to help the business firm integrate new knowledge into the business and help organization control the flow of paperwork (Laudon K. C. ; Laudon J. P. 1995). MIS are suitable to use in decision making situations where the information requirements can be gathered and access in advance and the need for information occurs regularly.
The highly structured information provided by these systems allows managers to evaluate an organization’s performance by comparing current with previous outputs http://www. chris-kimble. com/Courses/World_Med_MBA/Types-of-Information-System. html. An example might be the decision to change the price of a given product. In order to make such a decision it is useful to have data on production costs, existing profitability of the product, past sales of that and other products, and the effect that a previous price rise had on sales, as well as data concerning the prices of comparable products from competitors.
Decision Support Systems (DSS) – Decision support systems help managers monitor, control, organize work, (Laudon K. C. et al 1995) decision making, and administrative activities (Laudon K. C. & Laudon J. P. 1995). It is an information system that assists managers with unique, non-recurring strategic decisions that are relatively unstructured (Rowley J. 1996). According to Keen and Morton 1978, the systems support non-routine decision making (as cited in Laudon K. C. & Laudon J. P. 1995, p. 13).
A decision support system must be very flexible http://www. freetutes. com/systemanalysis/types-of-information-system. html It typically provides periodic reports rather than instant information on operations. It is therefore tend to support tactical and strategic decision making in situations where the risk associated with any error is high and a mistake can have serious consequences. These systems are often used to analyze existing structured information and allow managers to project the potential effects of their decisions into the future.
An example is a relocation control system that reports on the total moving, house hunting, and home financing costs for employees in all company divisions, noting wherever actual costs exceed budgets. Executive Information Systems (EIS) – Executive information systems are designed to assist top-level executives in the acquisition and use of the information that is necessary to support them in their top management of the organization (Rowley J. 1996). In other words it helps them to tackle and address key strategic issues and long term need, both in the firm and in the external environment.
Executive Information System are designed to be operated directly by executives without the need for intermediaries and easily tailored to the preferences of the individual using them http://www. chris-kimble. com/Courses/World_Med_MBA/Types-of-Information-System. html. EIS support them by providing them quick access to detail and investigation of a problem once the problem or opportunity has been identified. Output on the screen often uses a mixture of graphics and tables. Benefits of using Information Systems
Organization practicing pervasive as information systems has a wide range of significant benefits. They often view these as assets and a means to gain a competitive lead in their respective industry. There are number of benefits that organization could gain are as stated below: Enhance jobs – Implementing Information Systems can make jobs more efficient in terms of releasing employees to do other important tasks. It is no longer for staff needed to spend valuable time sorting through statistics, data and other pertinent information because the system has ability to gather it for them.
Information System provides a cost-effective way to conduct transactions, significantly cutting down the time involved in processing. Differentiation – Information System provides the ability to strategically define organization in a way that makes the business stand out from the competition. Information systems can be integrated in such a way where customers can be offered something no one else provides. With a unique design that makes your business appealing to do business with, you can easily increase your customer base. Decision Making – Information systems allow the vital element of providing “real-time” information.
In today’s competitive environment, a manager needs to make rapid decisions and to do this effectively and they need the most up to date information available to assist them. Properly designing their IS to custom fit the needs will enable them to accomplish this. Communication – Information systems possess ways to effectively and efficiently share information. Automated communication is a time and resource saver and can add tremendous value to business. With the help of information system, communication can become cheaper, quicker, and more efficient.
Organization can now communicate with anyone around the globe by simply text messaging them or sending them an email for an almost instantaneous response. The internet has also opened up face to face direct communication from different parts of the world thanks to the helps of video conferencing. Globalization – IS has not only brought the world closer together, but it has allowed the world’s economy to become a single interdependent system. This means that organization can not only share information quickly and efficiently, but they can also bring down barriers of linguistic and geographic boundaries.
The world has developed into a global village due to the help of information system allowing countries from different continent who are not only separated by distance but also by language to shares ideas and information with each other. Increasing Revenues – IS used technology to generate revenue, for example by making information products available through computer systems (Lucas H. C. Jr 1994). There is an abundance of financial databases and services to which one can subscribe. It is possible to obtain hundreds of types of data about companies and their financial conditions.
The Internet is the main source to advertise your products. Information system on the other hand has also helped to computerize the business process thus streamlining businesses to make them extremely cost effective money making machines. This in turn increases productivity which ultimately gives rise to profits that means better pay and less strenuous working conditions. Reducing Costs -One of the main benefits of implementing IS/IT in organizations has been cost savings. For instance, organization has automated clerical tasks to reduce costs.
Insurance companies and banks on the other hand generate products that are really information; bills, notices, renewals, and so on represent output, products that must be printed and distributed to customers. These systems have resulted in elimination of existing positions, whereas others have reduced the number of additional employees needed in the future. Taking Ernst &Young for example, the company has successfully reduced its office space by 2 million square feet by allowing their employees to work from home. http://www. bukisa. om/articles/20243_the-importance-of-information-system#ixzz1rMCWg2Uz Improving Quality – One reason to use IS/IT is to improve the quality of output: computer aided design is a good example. An engineer or draftsman uses a computer terminal to create engineering drawings. He or she stores the drawing on a computer file; it can be recalled later for easy modification. A system like this will also plot a drawing copy; changes are redrawn in minutes. The system reduces much of the time of design work and has dramatically reduced the need for draftsman.
Another example is through the usage of electronic data interchange (EDI) which connects firms to each other electronically. A typical application is order entry and acknowledgement. The use of EDI contributes to quality by reducing the opportunity for errors since data are entered only once. An information system offers a litany of benefits that help to make the process of managing information easier. Central access, easy back up, central distribution of information, easy record keeping, easy tax preparation, as well as easy customer trait identification http://www. blurtit. com/q8104822. html
More and more people are working from their homes nowadays. Information technology has become so sophisticated it allows people to choose to work from home. Teleconferencing and video conferencing enable employees to beam in whenever needed How to ensure effective implementation of IS in organization When manager has decided to change processes along with software, they must create a phased in approach to their organizations changes in order to make the change successful. Usually the push towards a new software system is backed by a need to change business from the current way of doing things.
Organization will become more efficient, to reduce paper usage, to provide better audit trail, to better market and care for a customer base and/or many other reasons. In order to implement change it is better to use conversion strategies in which to implement new system they cannot just simply forget the old system completely, it must done simultaneously so that change would become more effective. This is because if there is anything happen to the new system, the old system can still be easily retrieved. Changing too many things at once may overwhelm organization’s staff.
In addition, unless it is a very large company with a dedicated project team, it is very likely that they will not have the resources to properly supervise and implement both new software and new process. It is essential to really understand the full functionality of the system until it is implemented and are utilizing it for a period of time. Manager in organization will make better process decisions after going through the nuts and bolts pieces of the conversion and can now focus on all the bells and whistles the software offers. Organization need to provide sufficient training.
It also allows staff to brainstorm with one another as they are getting used to the software’s functionality. It is vital to follow up training after implementation of the system, even if it is only a brief overview. Doing so, will allow manager to realize the full benefits of their system. It will also give organization updated information on the system. It is vital to involve the right people in the organization. It is also important to identify a champion in each key area of the organization that can ensure the success of the implementation.
The champions do not necessarily need to be management, or supervisors. In fact, a trusted peer that is dedicated to the project may be able to better connect to the staff on the level of their daily duties (as well as provide excellent feedback regarding implementation details during the project). No matter what approach is being used by organization, implementing new software can definitely be a busy and stressful. Using these tips will assist more or less assist organization to a successful implementation. Conclusion
In conclusion, it is surprising facts that there are many more companies still do not use information system in their organization. Information system enables companies to react, respond, cater, store, retrieve, disseminate, and control their new valuable asset that is information. In the years to come, a good information system within a company will be no longer an option; it will become a compulsory in determining success and to gain competitive advantage. Implementing a new system typically comes with a large price tag, but if business requirements and processes are properly and accurately identified, the payoffs can be big.
Investing in information systems keeps a business competitive and helps an organization carry the ability to maintain visible status in the global economy. Without IS, a business will more than likely fall rapidly behind. The benefits of integrating technology within an organization can truly be limitless depending on the level of creativity, strategic planning and innovation in the decision making processes. REFERENCES Alter S. 1991, Information Systems: A Management Perspective, Addison-Wesley Publishing Company Inc. Axos 2008, The Importance of Information System http://www. bukisa. om/articles/20243_the-importance-of-information-system Fenwick T. et al. 2009, Reducing the Impact of Organizational Silos in Resilience, Resilient Organisations Research Report – 2009/01. http://www. resorgs. org. nz/pubs/Silos. pdf Laudon K. C. & Laudon J. P. 1995, Essentials of Management Information System, Prentice Hall Inc. ________________________ 2000, Management Information Systems, Prentice Hall, New Jersey http://www. bonissen. de/ib/summaries/Business%20Informatics%20(2-3). PDF Laudon K. C. et al 1995, Information Technology: Concepts and Issues, Boyd & Fraser Publishing Company.
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