The use of information technology (IT) has dramatically increased in the business world in the past decade. It has been acknowledged that information systems (IS) is a very important step to compete and grow. There are four elements of IS that new systems need to work correctly.
- Customers – The main function of IS is to be able to better support the end user or customer. This is both internal and external. Externally it could be an online shopper who wants to buy from a website. Internal customers would be something like employees or one department in a company who needs supplies from another department. IS was developed in order to better support external customers. Also something to focus on is flexibility supporting internal customers.
- Products and Services – This deals in data transformation. The IS has to work well in any industry. It helps prepare many types of services and/or products based on design. Customer expectations have to be satisfied in order to be considered successful.
- Business Processes – Improvements to processes directly influence performance. It provides relevant information to the company. This improves said company’s processes by adding or removing steps as needed.
- Communication Technology and Computers – This is the central piece of the information system. They have to be able to deliver efficient business processes and make the customers happy. This is done through either delivery of product or services rendered. Technology helps to improve communication through email and chat internally. Externally it provides a good website that people will enjoy visiting. Information can be accessed much more quickly which increases the competitive edge.
Why Use IS?
Information systems helps improve relations between customers and the business, or business to business relationships. The question is, which type of system does your company need? A lot of questions to consider before making the leap to upgrading
Define Information Systems
What exactly is an Information System (IS)? Let’s look at the definition here…an information systems focus on networks of hardware, software that people and organizations use daily to handle their data and information. These components are used in order to gather, analyze, store and disseminate information. The information in turn helps to support strategic decisions being made for the agency.
As for a competitive advantage, it can go either way. It seems that there’s an ongoing debate as to how much of an advantage IS gives, if at all. But as an example, Walmart has used it to a great advantage. One key to success for them was implementing a brand new supply-chain management system. It’s unique for them only to where suppliers can go in and review how well their products are selling at Walmart, in any of their stores at any location. Suppliers can petition them if they feel products are being sold to quickly so inventory levels can be increased for their products. It’s pretty interesting how it all works…so Walmart can drive prices down and respond to the market more quickly due to this new management system.
The Main Goal
The main goal of IS is to be able to change data into information that can be used in strategic decision making. Databases are what is considered collections of related information. Examples of this are MySQL and Microsoft Access, where data is inputted and organized into records as one example. A database has to be created in order for an IS to be built that will work correctly. The question is, where can big data be collected, sorted out and put into reports?
Competitive advantage is when said company can sustain profits over average for the industry they’re in. Differentiation comes to play also. The key is to learn how to use information systems to build competitive advantage. This is where SISP comes to play. The information system has to try to do one or more of the following:
- Deliver products or services at lower cost
- Deliver products/services differentiated from others
- Assist companies to focus on specific markets
- Allows for innovation
Examples of IS falling into this category are:
- Electric Data Interchange – Integrate supply chain electronically
- Collaborative Systems – Google Drive, Microsoft SharePoint, or Cisco WebEx
- Decision Support Systems – Helps companies to make strategic decisions
It has been shown through studies that information technology (IT) has assisted in increasing differences between companies instead of reducing them. Technology has sped up and heightened the amounts of differences. It also helps with increasing good management abilities in organizations. Through figuring out the right types of innovations to include with the upgrades, it can greatly increase competitive advantage in their industry.
Questions to Answer
What the company in question has to answer before upgrading anything though is, what exactly has to be changed in order to allow for competitive advantages? Is it the hardware that needs to be upgraded? CPU’s hard drives, devices? Or does the software have to be upgraded? Which new programs need to be implemented and to which department? What languages do the programs need to be written in? What kind of databases will be used? Are they going to create all new programs tailored specifically for them and maybe suppliers like Walmart did? These are just some of the questions that have to be answered before they begin anything, or there will be a mess of confusion at some point.
Whether or not a company wants to believe it, information systems (IS) are a very important part of how the business runs now. This includes how data is stored, transferred and understood by all the different departments in the agency. The problem is, it seems that business owners are not really aware of how important IS to their companies in being able to be managed in designated systems.
10 Reasons to Have New Information Systems
10 reasons that it is so important for companies are:
- Control Creation and Growth of Records – Less paper wasted as everything becomes computerized
- Reduces Operating Costs – Storing inactive records in IS costs less per linear foot for the company
- 3. It Improves Both Efficiency and Productivity – Helps to upgrade record keeping so retrieval of information needed is vastly improved
- Assimilate New Records Management Technologies – Can be used in any area of the company, helps analyze manual recordkeeping and applied automation
- Ensures Regulatory Compliance – Companies have to be able to make sure that they are in regulations by having a good IS that is responsible for regulatory compliances
- Minimize Litigation Risk – The main reason IS is used is to reduce the risk of litigation and penalties. A newer system put in place will help to ensure this happens.
- Safeguard Vital Information – This is necessary in order to protect records and information as all agencies are susceptible to attack or natural disasters. This will provide backups and save the information in a safe place of the company’s choosing, for retrieval later.
- It Helps to Support Better Management Decision Making Capabilities – A newer system put into place will help managers and executives to better find information that they need when they need it to make critical business decisions. ERP systems would be perfect here instead of doing everything manually.
- It Helps to Preserve Corporate Memory – This is done through everyday activities and record keeping.
- Foster Professionalism in Running the Company – Neatness and cleanliness are key in running a smooth organization
Why Update at All?
Good, solidly built IS means that companies that use it will be able to align their strategies together into a clear point of view as to where they want to go. It also helps to find relationships that would be considered critical and gaps in their company culture and infrastructure. Good information systems find answers on how to gain competitive advantage against their competition by improving alignment to strategic decision making.